Everybody loves money, particularly spending it! Getting new toys or new clothes that make you feel and look good is important for your confidence and self-esteem. But how do you know if you’re good with money or not? Even if you get paid a lot of money doesn’t mean you’re good with it. There are lots of successful individuals who have huge problems with money simply because they weren’t aware of the warning signs. In today’s world, it’s very important to be money conscious so here are five signs that you could have problems with money which can eventually lead to serious financial issues down the track.
You don’t have any savings
Many of us get complacent with our lifestyles – our car, our house, our jobs – and forget that things can certainly go wrong and everybody needs some financial cushioning for rainy days. Without any savings in the bank, what will cover you from events like hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial hit and you’ll be in a world of pain. You’ll have to take out a short-term, high interest loan which will just compound the issue – you can’t save any cash now so how will you pay off an extra expense? Though it’s easy to overlook, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors strongly recommend having three to six months of living expenses in an emergency fund.
You don’t know where your money goes
Being good with money means that you know when and how much money comes in, and where it goes when you spend it. If you have no idea where your money is being spent, it illustrates a lack of care and appreciation for your hard-earned cash, and can clearly result in financial complications in the future. Try making a budget and actively adhering to it. This will help you in having a greater understanding of your finances so you can recognise how much of your money is being squandered on needless items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a lot more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, particularly credit cards, then you’re heading for financial problems. It can take years, even decades, to get rid of a credit card debt by only making minimum repayments. In the meantime, interest payments will be eating away all your potential savings while you’re effectively just treading water. If this sounds familiar, it’s time to make a change and quickly. You have to get your priorities right by creating a plan, adhering to a budget, and saving as much money as possible to settle your remaining debts.
Spending more than you earn
The biggest sign of money problems is where your spending surpasses your income. Regardless of whether you have a comfortable savings account, you must always make sure that your income is more than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending way too much, it can become addictive and trigger even more issues, in addition to probable financial difficulties. Certain people try to disguise this problem by paying bills with their credit cards which only makes the problem worse in the long-term. Do you even know if your income is higher than your spending? If you’re uncertain, it’s definitely a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t use
A basic way to assess if you have money issues is to take a look in your wardrobe. Do you have clothes that still have the price tag on them? Everybody loves a sale, and it’s a good way to save money when cash is tight and you’re in need of something. But purchasing clothes purely because they’re on sale may reveal that you have money troubles. If this is the case, you may similarly be inclined to purchase other items simply because they’re on sale too. Buying unnecessary items under the impression that you’re saving money is something that must be amended.
Regardless of how much you get paid, if you’re not good with money then now is the time to modify your habits to avoid possible issues in the future. If any of these warning signs sound familiar to you, it may suggest that you have problems with money and should seek advice before it’s too late. All it takes is one financial hit and you’ll be pulled into the financial abyss. To find out what options you have, or to speak with someone about your finances, get in touch with Bankruptcy Experts Fremantle on 1300 795 575 or visit http://www.bankruptcyexpertsfremantle.com.au