Everyone loves money, particularly spending it! Getting new toys or new clothes which make you look and feel great 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 a lot of money doesn’t mean you’re good with it. There are plenty of successful individuals who have significant issues with money simply because they weren’t aware of the warning signs. In this day and age, it’s crucial to be money conscious so here are five signs that you may have issues with money which can gradually cause serious financial problems down the track.
Many of us get comfortable with our lifestyles – our car, our house, our profession – and forget that things can actually go wrong and every person needs some financial cushioning for rainy days. Without having 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 compound the issue – you can’t save any money now so how will you pay off an added expense? Although it’s easy to neglect, having no savings is a recipe for disaster and you should take action now before it’s too late. Most 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 you receive, and where it goes when you spend it. If you don’t know where your money is being spent, it suggests a lack of care and respect for your hard-earned cash, and can unquestionably bring about financial problems before you know it. Try making a budget and actively following it. This will aid you in having a greater awareness of your finances so you can recognise how much of your money is being eaten away on needless items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy 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, in particular credit cards, then you’re heading for financial troubles. It can take years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest payments will be eating away all your potential savings while you’re basically just treading water. If this seems familiar, it’s time to make a change and quickly. You should get your priorities right by creating a plan, sticking to a budget, and saving as much money as possible to repay your outstanding debts.
Spending more than you earn
The biggest sign of money issues is where your spending eclipses your earnings. Even when you have a comfortable savings account, you should always make sure that your earnings is more than your expenses, it’s just simple maths really. If you get into a bad habit of spending way too much, it can come to be addictive and create even more issues, on top of probable financial difficulties. Many people attempt to disguise this problem by paying bills with their credit cards which only makes the situation worse in the long run. Do you even know if your income is higher than your spending? If you’re uncertain, it’s probably a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t wear
A simple way to assess if you have money problems is to take a look in your wardrobe. Do you have clothes that still have the tag on them? Almost 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 buying clothes only because they’re on sale may indicate that you have money troubles. If this is the case, you may additionally be inclined to buy other items simply because they’re on sale too. Buying unnecessary items under the perception that you’re saving money is something that ought to be amended.
Regardless of how much you get paid, if you’re not good with money then now is the time to change your habits to steer clear of potential problems in the future. If any of these warning signs sound familiar to you, it may indicate 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 talk to someone about your finances, reach out to Bankruptcy Experts Wangaratta on 1300 795 575 or visit http://www.bankruptcyexpertswangaratta.com.au