Most financial challenges aren’t solely due to unfortunate events. They usually have a foundation of poor, consistent financial habits. With effective habits, most financial challenges can be handled. However, with improper financial habits, even the smallest unexpected expense can be devastating.
While there are many negative financial habits one could be guilty of committing, there are a few that are especially damaging, and the key is to recognize them and do something about it before it’s too late.
Here are 6 signs your finances are in trouble (and some ways you can fix it):
1. You can’t save consistently
People that are consistently free of financial challenges have a consistent saving habit. There’s always money available to handle the inevitable financial emergencies if you save part of your paycheck each time you get paid.
Make a promise to yourself that you’ll save a certain percentage of each paycheck. Getting on a written budget that prioritizes saving can help. If you’re on a tight budget, look at cutting back or eliminating things you don’t really need.
2. You spend excessively
The more you spend, the less you have to save. It’s that simple. Spending too much money makes you vulnerable and more likely to have financial challenges. Very excessive spending leads to accumulating debt, which is the ultimate financial curse…trust me…I know!
Look for other ways to amuse yourself other than spending money you don’t really have on things you don’t really need. I provide 30 things to do instead of spending money in this Instagram post.
3. You excessively use credit cards or other forms of debt
Debt is a major obstacle to financial health and stability. Debt can be such a burden and most debt comes with expensive terms that makes debt a costly way to spend money and that can make getting out of debt nearly impossible.
Beware of debt. Budget for essential items and save for emergencies and big purchases. If you have to use debt to purchase something, especially something non-essential, it’s a good bet that you can’t afford it.
4. You ignore bills when you get them
No one likes to pay bills. However, bills have a way of piling up and eventually have to be paid. During that time, you’re still spending money that should be going toward your bills. This is a huge mistake.
Make looking a your bills a ritual you perform one day a week. Spending just a few minutes at the beginning of each week looking at what bills are coming due can help you make sure your money is being allocated to what you need.
5. You’re constantly paying penalties, fees, and excessive interest
Did you know that credit card companies earn more money from late fees than they do from interest? ATM penalties are steep and those interest-free loans have huge interest penalties if you don’t pay them off on time.
Paying your bills on time can help you avoid late fees. If you know you need to pay a bill late, call or go online to make a payment arrangement, if possible. Use ATMs that don’t require a fee and/or budget for the cash you need for the week and take it out all at once. This will lessen the chances that you’ll run to an ATM for cash without a plan.
6. You’re raiding your savings, investments, and retirement accounts
There may be times that dipping into your savings or other accounts might be justified but it should be for a good reason. Cashing out part of your 401(k) for a trip to Disney World doesn’t qualify as a good reason. Wiping out your savings because you spent more money than you had to spend at Target probably isn’t a great idea either.
Savings accounts are for saving. Investment and retirement accounts are for saving and building wealth for your future self. Don’t rob your future self.
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