Everybody loves money, especially spending it! Getting new toys or new clothes that make you look and feel great 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 lots of money doesn’t suggest you’re good with it. There are a lot of successful individuals who have serious problems with money just because they weren’t aware of the warning signs. In today’s world, it’s vital to be money conscious so here are five signs that you could have issues with money which can subsequently result in serious financial troubles in the future.
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 every person needs some financial insulation for rainy days. Without any savings in the bank, what will cover you from incidents 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 have to take out a short-term, high interest loan which will just intensify the problem – you can’t save any cash presently so how will you repay an extra expense? While 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 have no idea where your money is being spent, it reveals a lack of care and appreciation for your hard-earned cash, and can clearly cause financial complications down the track. Try creating a budget and actively following it. This will help you in having a greater awareness of your finances so you can realise 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 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, specifically credit cards, then you’re heading for financial troubles. It can take many years, even decades, to get rid of a credit card debt by only making minimum repayments. Meanwhile, interest fees will be eating away all your prospective savings while you’re virtually just treading water. If this sounds familiar, it’s time to make a change and quickly. You should get your priorities straight by creating a plan, sticking to a budget, and saving as much money as possible to repay your remaining debts.
Spending more than you earn
The most evident sign of money issues is where your spending eclipses your income. Regardless of whether 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 get into a bad habit of spending too much, it can come to be addictive and create even more issues, on top of probable financial difficulties. Many people try to disguise this problem by paying bills with their credit cards which simply makes the issue 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 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 price tag on them? Almost everyone loves a sale, and it’s an excellent way to save money when cash is tight and you’re in need of something. But buying clothes just because they’re on sale may suggest that you have money problems. If this is the case, you may additionally be inclined to buy other items just because they’re on sale too. Purchasing unnecessary items under the perception that you’re saving money is something that needs to be amended.
Irrespective 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 signal 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 talk with someone about your finances, reach out to Bankruptcy Advice Perth on 1300 879 867 or visit https://www.bankruptcy-advice.com.au/perth