Everybody loves money, especially spending it! Buying new toys or new clothes which make you feel and look 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 plenty of money doesn’t mean you’re good with it. There are lots of successful individuals who have huge issues with money purely because they weren’t familiar with the warning signs. In this day and age, it’s critical to be money conscious so here are five signs that you could have problems with money which can gradually result in serious financial issues down the track.
A lot of us get comfortable with our lifestyles – our car, our home, our profession – and forget that things can in fact go wrong and everybody needs some financial cushioning for rainy days. Without having 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 have to take out a short-term, high interest loan which will only compound the problem – you can’t save any money presently so how will you repay an added expense? Although it’s easy to neglect, 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 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 suggests a lack of care and appreciation for your hard-earned cash, and can naturally lead to financial complications down the track. Try creating a budget and actively adhering to it. This will support you in having a better understanding of your finances so you can recognise how much of your money is being drained on unneeded 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 years, even decades, to clear a credit card debt by only making minimum repayments. In the meantime, interest rates will be eating away all your potential savings while you’re essentially 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 most evident sign of money issues is where your spending eclipses your earnings. Regardless of whether you have a comfortable savings account, you must 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 trigger even more issues, in addition to potential financial difficulties. Certain people attempt to mask this problem by paying bills with their credit cards which just makes the problem worse in the long-term. Do you even know if your income is greater than your spending? If you’re unsure, it’s definitely a good time to find out and make some adjustments.
You have new clothes in your wardrobe that you don’t use
A practical way to assess if you have money problems is to look in your wardrobe. Do you have clothes that still have the tag on them? Almost everyone 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 solely because they’re on sale may suggest that you have money issues. If this is the case, you may similarly be inclined to buy other items simply because they’re on sale too. Purchasing nonessential items under the perception that you’re saving money is something that ought to be addressed.
Regardless of how much you get paid, if you’re not good with money then now is the time to adjust your habits to steer clear of possible 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 blow and you’ll be drawn into the financial abyss. To find out what options you have, or to speak with someone about your finances, contact Bankruptcy Experts Adelaide on 1300 795 575 or visit http://www.bankruptcyexpertsadelaide.com.au