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? Even if you get paid a lot of money doesn’t imply you’re good with it. There are a lot of successful people who have significant problems with money simply because they weren’t aware of the warning signs. In this day and age, it’s essential to be money conscious so here are five signs that you could have issues with money which can eventually bring about serious financial problems down the track.
You don’t have any savings
A lot of us get complacent 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 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 hit and you’ll be in a world of pain. You’ll need to get a short-term, high interest loan which will just compound the problem – you can’t save any cash now so how will you repay an additional expense? Even though it’s easy to overlook, having no savings is a recipe for disaster and you should take action now before it’s too late. Most financial advisors strongly 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 respect for your hard-earned cash, and can surely lead to financial problems before you know it. Try making a budget and actively adhering to it. This will assist you in having a greater awareness of your finances so you can comprehend how much of your money is being squandered on unneeded 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 afford to make the minimum repayments on your loans, mainly credit cards, then you’re heading for financial problems. It can take years, even decades, to erase a credit card debt by only making minimum repayments. In the meantime, interest fees will be eating away all your potential savings while you’re basically just treading water. If this sounds familiar, it’s time to make a change and quickly. You have to get your priorities straight by creating a plan, following a budget, and saving as much money as possible to repay your outstanding debts.
Spending more than you earn
The biggest sign of money problems is where your spending surpasses your earnings. Even if you have a comfortable savings account, you should always ensure that your income is greater than your expenses, it’s just simple maths really. If you get into a bad habit of spending far too much, it can become addictive and cause even more issues, in addition to likely financial difficulties. A number of people try to disguise this problem by paying bills with their credit cards which basically makes the issue worse in the long-term. Do you even know if your income is more than your spending? If you’re uncertain, it’s perhaps a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t wear
An easy way to assess if you have money problems is to take a 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’re in need of something. But purchasing clothes just because they’re on sale may suggest that you have money troubles. If this is the case, you may also be inclined to purchase other items just because they’re on sale too. Buying unnecessary items under the impression that you’re saving money is something that needs to be remedied.
Regardless of how much you get paid, if you’re not good with money then now is the time to adjust your habits to stay clear of potential 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 speak with someone about your finances, contact Bankruptcy Experts Coffs Harbour on 1300 795 575 or visit http://www.bankruptcyexpertscoffsharbour.com.au