Everyone loves money, particularly spending it! Buying new toys or new clothes which make you look and feel 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 mean you’re good with it. There are plenty of successful individuals who have significant issues with money purely because they weren’t aware of the warning signs. In today’s world, it’s necessary to be money conscious so here are 5 signs that you may have problems with money which can gradually bring about serious financial issues down the track.
You don’t have any savings
Many of us get comfortable with our lifestyles – our car, our home, our jobs – and forget that things can certainly go wrong and everyone needs some financial cushioning for rainy days. Without any savings in the bank, what will cover you from incidents such as 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 need to apply for a short-term, high interest loan which will just compound the problem – you can’t save any cash presently so how will you pay off an additional expense? Although 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 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 signals a lack of care and respect for your hard-earned cash, and can clearly bring about financial complications in the future. Try making a budget and actively abiding by it. This will aid you in having a greater appreciation of your finances so you can realise how much of your money is being wasted on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate 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 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 ought to get your priorities straight by creating a plan, adhering to 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. Regardless of whether you have a comfortable savings account, you should always ensure that your income is more than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending far too much, it can come to be addictive and cause even more issues, in addition to potential financial difficulties. A number of people try to mask this problem by paying bills with their credit cards which just makes the situation worse in the long run. Do you even know if your earnings is more 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 wear
A useful way to assess if you have money issues 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 nice way to save money when cash is tight and you’re in need of something. But buying clothes purely because they’re on sale may reveal that you have money problems. If this is the case, you may similarly be inclined to buy other items purely because they’re on sale too. Purchasing unnecessary items under the impression that you’re saving money is something that needs 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 issues in the future. If any of these warning signs sound familiar to you, it may suggest 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 talk with someone about your finances, reach out to Bankruptcy Experts Brisbane on 1300 795 575 or visit http://www.bankruptcyexpertsbrisbane.com.au