Everyone loves money, particularly spending it! Buying 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? Even if you get paid plenty of money doesn’t suggest you’re good with it. There are lots of successful individuals who have significant problems with money simply because they weren’t familiar with the warning signs. Today, it’s paramount to be money conscious so here are 5 signs that you may have problems with money which can inevitably lead to serious financial issues down the track.
You don’t have any savings
A lot of us get comfortable with our lifestyles – our car, our home, our profession – and forget that things can actually go wrong and everyone needs some financial protection for rainy days. Without any savings in the bank, what will protect you from events like 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 take out a short-term, high interest loan which will just magnify the issue – you can’t save any cash currently so how will you pay back an added expense? Even though 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 comes in, and where it goes when you spend it. If you have no idea where your money is being spent, it suggests a lack of care and respect for your hard-earned cash, and can clearly result in financial problems down the track. Try creating a budget and actively abiding by it. This will help you in having a greater knowledge of your finances so you can understand how much of your money is being drained on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy spending money on yourself a whole 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 years, even decades, to clear a credit card debt by only making minimum repayments. Meanwhile, interest payments will be eating away all your prospective savings while you’re virtually just treading water. If this seems familiar, it’s time to make a change and quickly. You should get your priorities straight by making a plan, following a budget, and saving as much money as possible to repay your ongoing 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 comfortable savings account, you should always make sure that your earnings is higher than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending too much, it can come to be addictive and trigger even more issues, in addition to probable financial difficulties. Many 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 income is greater than your spending? If you’re not sure, it’s perhaps a good time to find out and make some adjustments.
You have new clothes in your wardrobe that you don’t use
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? Everyone loves a sale, and it’s a good way to save money when cash is tight and you need something. But buying clothes only because they’re on sale may signify that you have money issues. If this is the case, you may similarly be inclined to purchase other items purely because they’re on sale too. Purchasing nonessential items under the impression that you’re saving money is something that has to 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 stay clear of possible problems 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 speak to someone about your finances, reach out to Bankruptcy Experts Australia on 1300 795 575 or visit https://www.bankruptcyexpertsaustralia.com.au