Everyone loves money, especially spending it! Buying new toys or new clothes that make you look and feel 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 lots of money doesn’t indicate you’re good with it. There are a lot of successful individuals who have significant issues with money solely because they weren’t aware of the warning signs. Today, it’s very important to be money conscious so here are five signs that you might have issues with money which can subsequently cause serious financial problems down the track.
Most of us get complacent with our lifestyles – our car, our home, our work – 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 get a short-term, high interest loan which will just magnify the problem – you can’t save any money currently so how will you repay a further expense? Although it’s easy to ignore, 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 comes in, and where it goes when you spend it. If you have no idea where your money is being spent, it signifies a lack of care and appreciation for your hard-earned cash, and can unquestionably result in financial complications in the future. Try creating a budget and actively complying with it. This will help you in having a greater awareness of your finances so you can understand how much of your money is being squandered on unnecessary 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 manage to make the minimum repayments on your loans, especially credit cards, then you’re heading for financial problems. 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 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, adhering to a budget, and saving as much money as possible to repay your remaining debts.
Spending more than you earn
The biggest sign of money problems is where your spending eclipses your income. Regardless of whether you have a substantial savings account, you must always make sure that your income is greater 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 bring about even more issues, in addition to probable financial difficulties. Certain people attempt to mask this problem by paying bills with their credit cards which just makes the issue worse in the long-term. Do you even know if your income is higher than your spending? If you’re unsure, it’s probably a good time to find out and make some adjustments.
You have new clothes in your wardrobe that you don’t use
A useful way to check 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 need something. But purchasing clothes solely because they’re on sale may signal that you have money troubles. If this is the case, you may additionally be inclined to purchase other items simply because they’re on sale too. Purchasing unnecessary items under the impression that you’re saving money is something that has to be amended.
Irrespective of how much you get paid, if you’re not good with money then now is the time to change your habits to prevent potential issues 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 pulled into the financial abyss. To find out what options you have, or to speak to someone about your finances, get in touch with Bankruptcy Experts Hervey Bay on 1300 795 575 or visit http://www.bankruptcyexpertsherveybay.com.au