Everybody loves money, particularly 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 plenty of money doesn’t indicate you’re good with it. There are plenty of successful individuals who have serious issues with money solely because they weren’t familiar with the warning signs. In today’s world, it’s paramount to be money conscious so here are 5 signs that you may have issues with money which can eventually result in serious financial issues in the future.
Many of us get comfortable with our lifestyles – our car, our home, our jobs – and forget that things can in fact go wrong and everybody needs some financial cushioning for rainy days. Without any savings in the bank, what will cover 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 world of pain. You’ll need to take out a short-term, high interest loan which will only intensify the problem – you can’t save any money now so how will you pay off a further expense? While it’s easy to overlook, 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 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 have no idea where your money is being spent, it signals a lack of care and appreciation for your hard-earned cash, and can definitely trigger financial problems in the future. Try creating a budget and actively following it. This will aid you in having a greater knowledge of your finances so you can recognise 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, especially credit cards, then you’re heading for financial problems. It can take many years, even decades, to clear 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 effectively just treading water. If this sounds familiar, it’s time to make a change and quickly. You have to get your priorities right by creating a plan, adhering to a budget, and saving as much money as possible to settle your pending debts.
Spending more than you earn
The biggest sign of money issues is where your spending surpasses your earnings. Even if you have a healthy savings account, you must always make sure that your earnings is more than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending excessively, it can come to be addictive and lead to even more issues, on top of likely financial difficulties. Many people attempt to mask this problem by paying bills with their credit cards which merely makes the problem worse in the long run. 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 modifications.
You have new clothes in your wardrobe that you don’t use
A basic way to evaluate if you have money problems is to look in your wardrobe. Do you have clothes that still have the tag on them? Everybody loves a sale, and it’s a good way to save money when cash is tight and you need something. But purchasing clothes just because they’re on sale may illustrate that you have money issues. If this is the case, you may also be inclined to purchase other items just because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that needs to be fixed.
Irrespective of how much you get paid, if you’re not good with money then now is the time to modify your habits to steer clear of potential problems 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 blow and you’ll be sucked into the financial abyss. To find out what options you have, or to talk to someone about your finances, contact Bankruptcy Advice on 1300 879 867 or visit https://www.bankruptcy-advice.com.au/