Everyone loves money, especially spending it! Buying new toys or new clothes which make you feel and look 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 serious issues with money solely because they weren’t aware of the warning signs. Today, it’s very important to be money conscious so here are 5 signs that you may have problems with money which can ultimately cause serious financial troubles in the future.
Most of us get comfortable with our lifestyles – our car, our house, our profession – and forget that things can certainly go wrong and everybody needs some financial insulation 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 hit and you’ll be in a world of pain. You’ll need to get a short-term, high interest loan which will only magnify the problem – you can’t save any money currently so how will you pay back 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 recommend 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 illustrates a lack of care and appreciation for your hard-earned cash, and can surely result in financial problems down the track. Try making a budget and actively adhering to it. This will aid you in having a greater knowledge of your finances so you can realise how much of your money is being squandered on needless items. After a month or so, reward yourself for sticking to your budget and you’ll value spending money on yourself a great deal more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, especially 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. In the meantime, interest payments will be eating away all your prospective savings while you’re basically just treading water. If this seems familiar, it’s time to make a change and quickly. You have to get your priorities straight by creating a plan, following a budget, and saving as much money as possible to settle your pending debts.
Spending more than you earn
The most evident sign of money problems is where your spending eclipses your income. Even if you have a substantial savings account, you should always make sure that your earnings is greater than your expenses, it’s just basic maths really. If you get into a bad habit of spending excessively, it can come to be addictive and create even more issues, in addition to likely financial difficulties. Certain people attempt to disguise this problem by paying bills with their credit cards which just makes the issue worse in the long-term. Do you even know if your earnings is greater than your spending? If you’re uncertain, it’s probably a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t use
A practical way to evaluate if you have money problems is to search through your wardrobe. Do you have clothes that still have the price tag on them? Almost everyone loves a sale, and it’s a nice way to save money when cash is tight and you need something. But purchasing clothes just because they’re on sale may signify that you have money troubles. If this is the case, you may also be inclined to purchase other items purely because they’re on sale too. Purchasing nonessential items under the perception that you’re saving money is something that will need to be addressed.
Regardless of how much you get paid, if you’re not good with money then now is the time to modify your habits to avoid potential complications in the future. If any of these warning signs sound familiar to you, it may signify 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 drawn into the financial abyss. To find out what options you have, or to speak to someone about your finances, get in touch with Bankruptcy Experts Dandenong on 1300 795 575 or visit http://www.bankruptcyexpertsdandenong.com.au