Everybody loves money, especially spending it! Buying new toys or new clothes which 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 plenty of money doesn’t suggest you’re good with it. There are loads of successful individuals who have significant issues with money purely because they weren’t familiar with the warning signs. Today, it’s crucial to be money conscious so here are five signs that you could have problems with money which can ultimately trigger serious financial troubles down the track.
You don’t have any savings
Many of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can actually go wrong and everybody needs some financial protection for rainy days. Without 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 hit and you’ll be in a world of pain. You’ll have to apply for a short-term, high interest loan which will just compound the issue – you can’t save any cash presently so how will you repay an extra expense? Though 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 suggest 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 certainly result in financial problems in the near future. Try making a budget and actively abiding by it. This will assist you in having a greater knowledge of your finances so you can recognise how much of your money is being squandered on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a whole lot 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 troubles. It can take years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest payments 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 ought to get your priorities straight by making a plan, following a budget, and saving as much money as possible to settle your ongoing debts.
Spending more than you earn
The clearest sign of money issues is where your spending overtakes your earnings. Even if you have a substantial savings account, you must always ensure that your income is greater than your expenses, it’s just basic maths really. If you get into a bad habit of spending excessively, it can become addictive and trigger even more issues, in addition to potential financial difficulties. A number of people try to mask this problem by paying bills with their credit cards which just makes the situation worse in the long run. Do you even know if your income is more 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
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 price tag on them? Everyone loves a sale, and it’s an excellent way to save money when cash is tight and you need something. But purchasing clothes only because they’re on sale may signal 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 must 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 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 blow and you’ll be sucked into the financial abyss. To find out what options you have, or to talk with someone about your finances, reach out to Bankruptcy Experts Perth on 1300 795 575 or visit Bankruptcy Perth