Everyone 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. But how do you know if you’re good with money or not? Just because you get paid heaps of money doesn’t suggest you’re good with it. There are lots of successful individuals who have big problems with money solely because they weren’t familiar with the warning signs. In this day and age, it’s necessary to be money conscious so here are five signs that you may have problems with money which can eventually bring about serious financial issues in the future.
Many of us get complacent with our lifestyles – our car, our house, our jobs – and forget that things can certainly go wrong and everybody needs some financial protection for rainy days. Without having any savings in the bank, what will protect you from events such as 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 get a short-term, high interest loan which will only compound the problem – you can’t save any money now so how will you pay back an added expense? Whilst it’s easy to ignore, having no savings is a recipe for disaster and you should take action now before it’s too late. The majority of 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 shows a lack of care and appreciation for your hard-earned cash, and can definitely trigger financial problems down the track. Try creating a budget and actively adhering to it. This will assist you in having a greater understanding of your finances so you can comprehend how much of your money is being drained on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll value spending money on yourself a whole lot more.
Making minimum repayments only
If you can only afford 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 erase a credit card debt by only making minimum repayments. In the meantime, interest payments will be eating away all your potential savings while you’re essentially just treading water. If this seems familiar, it’s time to make a change and quickly. You need to get your priorities straight by creating a plan, sticking to a budget, and saving as much money as possible to settle your remaining debts.
Spending more than you earn
The most evident sign of money troubles is where your spending eclipses your income. Whether or not you have a comfortable 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 excessively, it can come to be addictive and trigger even more issues, in addition to probable financial difficulties. A number of people try to mask this problem by paying bills with their credit cards which just makes the problem worse in the long run. Do you even know if your income is more than your spending? If you’re unsure, it’s certainly a good time to find out and make some adjustments.
You have new clothes in your wardrobe that you don’t wear
A simple way to evaluate if you have money issues is to search through 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 reveal that you have money troubles. If this is the case, you may similarly 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 has to be amended.
Regardless of how much you get paid, if you’re not good with money then now is the time to adjust your habits to prevent possible 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 hit and you’ll be pulled into the financial abyss. To find out what options you have, or to speak with someone about your finances, contact Bankruptcy Experts Kalgoorlie on 1300 795 575 or visit https://www.bankruptcyexpertskalgoorlie.com.au