Everybody loves money, particularly spending it! Buying new toys or new clothes that make you feel and look great 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 indicate you’re good with it. There are plenty of successful individuals who have significant issues with money purely because they weren’t aware of the warning signs. Today, it’s essential to be money conscious so here are five signs that you could have problems with money which can inevitably result in serious financial troubles in the future.
Most of us get complacent with our lifestyles – our car, our house, our jobs – and forget that things can certainly go wrong and every person 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 blow and you’ll be in a lot of trouble. You’ll need to get a short-term, high interest loan which will only exacerbate the problem – you can’t save any money currently so how will you repay a further 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 advise 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 you receive, 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 obviously bring about financial problems in the future. Try creating a budget and actively complying with it. This will support you in having a better appreciation of your finances so you can understand how much of your money is being wasted on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a lot 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 years, even decades, to get rid of a credit card debt by only making minimum repayments. Meanwhile, interest payments will be eating away all your potential savings while you’re effectively just treading water. If this seems familiar, it’s time to make a change and quickly. You ought to get your priorities straight by making a plan, adhering to a budget, and saving as much money as possible to pay off your ongoing debts.
Spending more than you earn
The biggest sign of money troubles is where your spending surpasses your income. Even when you have a substantial savings account, you should always ensure that your earnings is more than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending excessively, it can come to be addictive and result in even more issues, in addition to likely financial difficulties. Certain people attempt to mask this problem by paying bills with their credit cards which merely makes the situation worse in the long-term. Do you even know if your earnings is higher than your spending? If you’re unsure, it’s probably a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t use
A basic way to evaluate if you have money problems is to take a look in your wardrobe. Do you have clothes that still have the tag on them? 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 signal that you have money troubles. If this is the case, you may similarly be inclined to purchase other items purely because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that needs to be addressed.
Regardless of how much you get paid, if you’re not good with money then now is the time to change your habits to stay clear of potential issues in the future. If any of these warning signs sound familiar to you, it may suggest 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, get in touch with Bankruptcy Experts Penrith on 1300 795 575 or visit https://www.bankruptcyexpertspenrith.com.au