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. Yet how do you know if you’re good with money or not? Even if you get paid heaps of money doesn’t mean you’re good with it. There are a lot of successful people who have big issues with money simply because they weren’t familiar with the warning signs. In this day and age, it’s paramount to be money conscious so here are five signs that you might have problems with money which can inevitably bring about serious financial troubles in the future.
You don’t have any savings
Many of us get complacent with our lifestyles – our car, our house, our work – and forget that things can certainly go wrong and every person needs some financial insulation 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 apply for a short-term, high interest loan which will only magnify the issue – you can’t save any cash presently so how will you pay off a further expense? Though it’s easy to overlook, having no savings is a recipe for disaster and you should act now before it’s too late. Most financial advisors suggest 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 signifies a lack of care and respect for your hard-earned cash, and can definitely lead to financial problems before you know it. Try making a budget and actively adhering to it. This will help you in having a better awareness of your finances so you can recognise 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 whole lot 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 rates 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 need to get your priorities right by creating a plan, sticking to a budget, and saving as much money as possible to pay off your remaining debts.
Spending more than you earn
The clearest sign of money issues is where your spending overtakes your income. Even when you have a comfortable savings account, you must always make sure that your earnings is higher than your expenses, it’s just simple maths really. If you get into a bad habit of spending too much, it can become addictive and bring about even more issues, in addition to probable financial difficulties. Many people try to disguise this problem by paying bills with their credit cards which merely makes the situation worse in the long run. Do you even know if your income is more than your spending? If you’re not sure, it’s probably a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t use
An easy way to check if you have money issues is to search through your wardrobe. Do you have clothes that still have the price tag on them? Everybody loves a sale, and it’s a good way to save money when cash is tight and you need something. But purchasing clothes only because they’re on sale may reveal that you have money troubles. If this is the case, you may additionally be inclined to purchase other items simply because they’re on sale too. Purchasing unneeded items under the perception that you’re saving money is something that needs to be corrected.
Despite how much you get paid, if you’re not good with money then now is the time to modify your habits to stay away from potential problems in the future. If any of these warning signs sound familiar to you, it may signal 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 speak to someone about your finances, reach out to Bankruptcy Melbourne on 1300 879 867 or visit http://www.bankruptcymelbourne.com