Everyone loves money, particularly spending it! Getting new toys or new clothes that make you look and feel great is important for your confidence and self-esteem. Yet how do you know if you’re good with money or not? Even if you get paid plenty of money doesn’t mean you’re good with it. There are loads of successful people who have serious problems with money simply because they weren’t aware of the warning signs. In today’s world, it’s imperative to be money conscious so here are 5 signs that you could have issues with money which can eventually trigger serious financial troubles in the future.
Most of us get comfortable with our lifestyles – our car, our home, our profession – and forget that things can certainly go wrong and every person needs some financial protection for rainy days. Without having any savings in the bank, what will protect you from events like hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial blow and you’ll be in a world of pain. You’ll have to take out a short-term, high interest loan which will only compound the problem – you can’t save any cash currently so how will you repay a further expense? Although it’s easy to neglect, having no savings is a recipe for disaster and you should take action now before it’s too late. Most financial advisors advise having three to six months of living expenses in an emergency fund.
You have no idea where your money goes
Being good with money means that you know when and how much money you receive, and where it goes when you spend it. If you don’t know where your money is being spent, it shows a lack of care and respect for your hard-earned cash, and can unquestionably lead to financial problems in the future. Try making a budget and actively following it. This will help you in having a better appreciation of your finances so you can understand how much of your money is being drained on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a great deal more.
Making minimum repayments only
If you can only afford to make the minimum repayments on your loans, specifically credit cards, then you’re heading for financial troubles. It can take many years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest rates will be eating away all your potential savings while you’re ultimately just treading water. If this seems familiar, it’s time to make a change and quickly. You have to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to settle your pending debts.
Spending more than you earn
The biggest sign of money troubles is where your spending eclipses your earnings. Even if you have a healthy savings account, you must always ensure that your income is greater than your expenses, it’s just simple maths really. If you get into a bad habit of spending too much, it can come to be addictive and create even more issues, on top of probable financial difficulties. Certain people attempt to mask this problem by paying bills with their credit cards which merely makes the issue worse in the long-term. Do you even know if your income is greater than your spending? If you’re not sure, it’s perhaps a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t use
A practical way to check 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? Almost everyone loves a sale, and it’s an excellent way to save money when cash is tight and you’re in need of something. But buying clothes purely because they’re on sale may illustrate that you have money problems. If this is the case, you may similarly be inclined to purchase other items simply because they’re on sale too. Purchasing nonessential items under the impression that you’re saving money is something that will need to be addressed.
Despite how much you get paid, if you’re not good with money then now is the time to change your habits to stay clear of possible complications in the future. If any of these warning signs sound familiar to you, it may signify 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 drawn 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 Rockhampton on 1300 795 575 or visit www.bankruptcyexpertsrockhampton.com.au