Everyone loves money, particularly 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 heaps of money doesn’t imply you’re good with it. There are loads of successful people who have big issues with money solely because they weren’t aware of the warning signs. Today, it’s important to be money conscious so here are 5 signs that you could have issues with money which can eventually lead to serious financial problems down the track.
Many of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can certainly go wrong and everyone needs some financial insulation 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 hit and you’ll be in a lot of trouble. You’ll need to get a short-term, high interest loan which will just compound the issue – you can’t save any money presently so how will you pay off an extra expense? Though it’s easy to neglect, having no savings is a recipe for disaster and you should act 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 don’t know 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 don’t know where your money is being spent, it indicates a lack of care and appreciation for your hard-earned cash, and can evidently lead to financial complications before you know it. Try creating a budget and actively abiding by it. This will aid you in having a better understanding of your finances so you can comprehend 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 appreciate 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 many years, even decades, to get rid of a credit card debt by only making minimum repayments. Meanwhile, interest charges will be eating away all your potential savings while you’re essentially just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities right by creating a plan, adhering to a budget, and saving as much money as possible to repay your pending debts.
Spending more than you earn
The biggest sign of money troubles is where your spending eclipses your income. Regardless of whether you have a comfortable savings account, you should always ensure that your earnings is more than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending excessively, it can come to be addictive and lead to even more issues, on top of probable financial difficulties. Certain people try to disguise this problem by paying bills with their credit cards which merely makes the problem worse in the long-term. Do you even know if your earnings is higher than your spending? If you’re unsure, it’s certainly 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 issues is to take a look in 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 buying clothes simply because they’re on sale may reveal that you have money troubles. If this is the case, you may also be inclined to buy other items purely because they’re on sale too. Buying unneeded items under the impression that you’re saving money is something that must be fixed.
Despite 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 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 talk with someone about your finances, contact Bankruptcy Experts Newcastle on 1300 795 575 or visit http://www.bankruptcyexpertsnewcastle.com.au