Everybody loves money, especially spending it! Buying new toys or new clothes that 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? Just because you get paid a lot of money doesn’t indicate you’re good with it. There are lots of successful individuals who have huge problems with money just because they weren’t familiar with the warning signs. In today’s world, it’s vital to be money conscious so here are 5 signs that you may have problems with money which can inevitably result in serious financial problems down the track.
Most of us get comfortable with our lifestyles – our car, our home, our profession – and forget that things can actually 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 apply for a short-term, high interest loan which will only compound the problem – you can’t save any cash currently so how will you repay an extra expense? Though it’s easy to neglect, having no savings is a recipe for disaster and you should act now before it’s too late. Most financial advisors recommend 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 signifies a lack of care and respect for your hard-earned cash, and can unquestionably result in financial issues down the track. Try making a budget and actively complying with it. This will aid you in having a greater appreciation of your finances so you can understand how much of your money is being eaten away on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll value spending money on yourself a lot more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, mainly credit cards, then you’re heading for financial troubles. It can take years, even decades, to clear 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 sounds familiar, it’s time to make a change and quickly. You have to get your priorities right by creating a plan, following a budget, and saving as much money as possible to repay your remaining debts.
Spending more than you earn
The most evident sign of money problems is where your spending eclipses your income. Even when you have a healthy savings account, you should 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 too much, it can come to be addictive and create even more issues, in addition to potential financial difficulties. Many people attempt to mask this problem by paying bills with their credit cards which simply makes the issue worse in the long-term. Do you even know if your income is more than your spending? If you’re not sure, it’s definitely a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t use
A basic way to check if you have money problems is to search through your wardrobe. Do you have clothes that still have the tag on them? Almost everyone loves a sale, and it’s a good way to save money when cash is tight and you need something. But purchasing clothes simply because they’re on sale may signify that you have money issues. If this is the case, you may additionally be inclined to purchase other items just because they’re on sale too. Purchasing unneeded items under the impression that you’re saving money is something that needs to be fixed.
Despite how much you get paid, if you’re not good with money then now is the time to modify your habits to stay away from 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 blow and you’ll be drawn into the financial abyss. To find out what options you have, or to talk to someone about your finances, get in touch with Bankruptcy Experts Tweed Coast on 1300 795 575 or visit http://www.bankruptcyexpertstweedcoast.com.au