Everybody loves money, especially spending it! Buying new toys or new clothes that 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 imply you’re good with it. There are lots of successful individuals who have huge issues with money simply 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 lead to serious financial issues down the track.
You don’t have any savings
Many of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can certainly go wrong and every person needs some financial protection for rainy days. Without any savings in the bank, what will cover you from events like 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 magnify the issue – you can’t save any cash presently so how will you repay an added expense? Whilst it’s easy to ignore, 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 have no idea 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 shows a lack of care and respect for your hard-earned cash, and can evidently result in financial issues before you know it. Try making a budget and actively adhering to it. This will assist you in having a better understanding of your finances so you can recognise how much of your money is being eaten away on unneeded 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, particularly 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. Meanwhile, interest fees will be eating away all your prospective savings while you’re effectively just treading water. If this sounds familiar, it’s time to make a change and quickly. You ought to get your priorities straight by making a plan, following 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 eclipses your income. Even when you have a substantial savings account, you should always make sure that your income is more than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending way too much, it can come to be addictive and lead to even more issues, on top of potential financial difficulties. Some people try to mask this problem by paying bills with their credit cards which merely makes the issue worse in the long-term. Do you even know if your income is more than your spending? If you’re unsure, it’s definitely a good time to find out and make some changes.
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? Everybody loves a sale, and it’s a great 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 illustrate that you have money troubles. If this is the case, you may also be inclined to purchase other items just because they’re on sale too. Buying unneeded items under the perception that you’re saving money is something that has to be remedied.
Irrespective of how much you get paid, if you’re not good with money then now is the time to modify your habits to prevent 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 pulled into the financial abyss. To find out what options you have, or to talk to someone about your finances, get in touch with Bankruptcy Experts Hobart on 1300 795 575 or visit http://www.bankruptcyexpertshobart.com.au