Everyone loves money, particularly spending it! Buying new toys or new clothes which make you feel and look good 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 indicate you’re good with it. There are plenty of successful individuals who have serious problems with money simply because they weren’t familiar with the warning signs. Today, it’s imperative to be money conscious so here are 5 signs that you might have problems with money which can eventually trigger serious financial problems in the future.
You don’t have any savings
Most of us get comfortable with our lifestyles – our car, our home, our jobs – and forget that things can actually go wrong and everyone 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 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 now so how will you pay off a further expense? While it’s easy to overlook, having no savings is a recipe for disaster and you should act now before it’s too late. Most 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 you receive, and where it goes when you spend it. If you don’t know where your money is being spent, it signifies a lack of care and appreciation for your hard-earned cash, and can clearly result in financial problems before you know it. Try creating a budget and actively adhering to it. This will help you in having a greater understanding of your finances so you can understand how much of your money is being drained on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll value 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 problems. It can take years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest charges will be eating away all your prospective savings while you’re effectively just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities right by creating a plan, following a budget, and saving as much money as possible to pay off your outstanding debts.
Spending more than you earn
The clearest sign of money troubles is where your spending surpasses your income. Regardless of whether you have a healthy savings account, you must always make sure that your earnings is more than your expenses, it’s just basic maths really. If you get into a bad habit of spending far too much, it can come to be addictive and bring about even more issues, in addition to potential financial difficulties. Many people try to disguise this problem by paying bills with their credit cards which simply makes the problem worse in the long run. Do you even know if your income is higher than your spending? If you’re not sure, it’s perhaps a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t use
An easy way to assess if you have money issues is to look in your wardrobe. Do you have clothes that still have the price tag on them? Everybody loves a sale, and it’s an excellent way to save money when cash is tight and you’re in need of something. But purchasing clothes just because they’re on sale may signal that you have money issues. If this is the case, you may similarly be inclined to buy other items simply because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that must be remedied.
Irrespective of how much you get paid, if you’re not good with money then now is the time to modify your habits to avoid potential problems in the future. If any of these warning signs sound familiar to you, it may reveal that you have problems with money and should seek advice before it’s too late. All it takes is one financial blow and you’ll be sucked into the financial abyss. To find out what options you have, or to speak to someone about your finances, reach out to Bankruptcy Experts Cairns on 1300 795 575 or visit http://www.bankruptcyexpertscairns.com.au