Everyone loves money, particularly spending it! Getting 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? Even if you get paid a lot of money doesn’t indicate you’re good with it. There are a lot of successful people who have huge problems with money just because they weren’t aware of the warning signs. In today’s world, it’s vital to be money conscious so here are 5 signs that you might have problems with money which can inevitably cause serious financial issues in the future.
A lot 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 cushioning for rainy days. Without having 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 lot of trouble. You’ll have to get a short-term, high interest loan which will only magnify the issue – you can’t save any money now so how will you repay a further expense? Even though it’s easy to ignore, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors strongly 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 you receive, and where it goes when you spend it. If you don’t know where your money is being spent, it reveals a lack of care and appreciation for your hard-earned cash, and can unquestionably trigger financial issues down the track. Try creating a budget and actively following it. This will assist you in having a greater appreciation of your finances so you can recognise how much of your money is being wasted on unneeded items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a lot 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 many 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 effectively just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities right 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 clearest sign of money problems is where your spending surpasses your income. Even when you have a healthy savings account, you should always make sure that your earnings is higher than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending excessively, it can come to be addictive and result in even more issues, on top of probable financial difficulties. Certain people try to disguise this problem by paying bills with their credit cards which simply makes the situation worse in the long run. 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 wear
A practical 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? Everyone 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 issues. If this is the case, you may additionally be inclined to buy other items simply because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that ought to be remedied.
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 hit and you’ll be drawn into the financial abyss. To find out what options you have, or to speak with someone about your finances, get in touch with Bankruptcy Experts Darwin on 1300 795 575 or visit http://www.bankruptcyexpertsdarwin.com.au