Everybody loves money, particularly spending it! Getting 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 lots of money doesn’t indicate you’re good with it. There are loads of successful people who have big issues with money simply because they weren’t aware of the warning signs. In this day and age, it’s very important to be money conscious so here are 5 signs that you could have problems with money which can inevitably cause serious financial problems down the track.
A lot of us get complacent with our lifestyles – our car, our house, our work – and forget that things can in fact go wrong and everyone needs some financial insulation for rainy days. Without any savings in the bank, what will protect 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 apply for a short-term, high interest loan which will only magnify the issue – you can’t save any money presently so how will you repay an extra expense? Even though it’s easy to neglect, 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 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 issues in the near future. Try creating a budget and actively following it. This will support you in having a greater understanding of your finances so you can understand how much of your money is being squandered on nonessential 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 manage to make the minimum repayments on your loans, particularly credit cards, then you’re heading for financial problems. It can take years, even decades, to clear a credit card debt by only making minimum repayments. Meanwhile, interest fees will be eating away all your prospective savings while you’re essentially just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to repay your pending debts.
Spending more than you earn
The biggest sign of money problems is where your spending surpasses your earnings. Regardless of whether you have a substantial savings account, you must always ensure that your income is higher than your expenses, it’s just simple maths really. If you get into a bad habit of spending too much, it can become addictive and lead to even more issues, on top of probable financial difficulties. Certain people try to mask this problem by paying bills with their credit cards which simply 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 definitely a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t wear
A useful 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 an excellent 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 indicate that you have money problems. 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 perception that you’re saving money is something that should be fixed.
Despite how much you get paid, if you’re not good with money then now is the time to adjust your habits to steer clear of possible complications 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 sucked into the financial abyss. To find out what options you have, or to talk to someone about your finances, reach out to Bankruptcy Experts Gold Coast on 1300 879 867 or visit http://www.bankruptcyexpertsgoldcoast.com.au