Everyone loves money, especially 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? Just because you get paid a lot of money doesn’t mean you’re good with it. There are plenty of successful individuals who have big issues with money just because they weren’t aware of the warning signs. In this day and age, it’s paramount to be money conscious so here are 5 signs that you may have issues with money which can subsequently cause serious financial issues in the future.
You don’t have any savings
Most of us get complacent with our lifestyles – our car, our house, our work – 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 protect you from incidents 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 lot of trouble. You’ll have to take out a short-term, high interest loan which will just compound the problem – you can’t save any cash currently so how will you pay back an added expense? Even though 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 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 don’t know where your money is being spent, it illustrates a lack of care and appreciation for your hard-earned cash, and can obviously lead to financial complications in the near future. Try creating a budget and actively adhering to it. This will support you in having a better appreciation of your finances so you can realise how much of your money is being eaten away on unneeded 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, especially credit cards, then you’re heading for financial troubles. It can take many years, even decades, to get rid of a credit card debt by only making minimum repayments. In the meantime, interest rates will be eating away all your potential savings while you’re virtually 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, sticking to a budget, and saving as much money as possible to pay off your pending debts.
Spending more than you earn
The most evident sign of money troubles is where your spending surpasses your earnings. Even when you have a comfortable savings account, you should always ensure that your earnings is more 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 lead to even more issues, on top of potential financial difficulties. Certain people try to disguise this problem by paying bills with their credit cards which only makes the situation worse in the long run. Do you even know if your earnings is greater than your spending? If you’re not sure, it’s definitely a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t wear
A useful way to evaluate if you have money issues is to take a look in your wardrobe. Do you have clothes that still have the tag on them? Almost everyone loves a sale, and it’s a nice 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 indicate that you have money issues. If this is the case, you may also be inclined to buy other items just because they’re on sale too. Buying nonessential items under the impression that you’re saving money is something that has to be amended.
Despite how much you get paid, if you’re not good with money then now is the time to adjust your habits to steer clear of potential issues in the future. If any of these warning signs sound familiar to you, it may signal 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 talk to someone about your finances, get in touch with Bankruptcy Experts Geraldton on 1300 795 575 or visit http://www.bankruptcyexpertsgeraldton.com.au