Financial trouble can sneak up on all of us at different points in our lives. Whether you’re making good money and putting it in the wrong places, or drowning in debt payments, there are always better ways to manage your funds and improve how you approach your finances. Here are 5 warning signs you might be headed for financial trouble:
You’re constantly making minimum payments.
Making minimum payments toward your debt should always be a short term tactic, never your main method for paying down your debts or your credit cards. When you only ever pay the minimum payment, you’ll only accrue more interest over time and never chip away at the principal interest.
Your savings are stalled or nonexistent.
If you’re stalled out on making any progress toward an emergency fund, or if you’ve completely depleted your savings, it’s time to evaluate both your spending habits and your long-term financial goals.
You’re living paycheck to paycheck, or relying on credit cards.
If you don’t have enough money to pay your bills every month and are relying on your credit cards to pay your bills, you’ll quickly run out of money and have nothing to fall back on. When your debts begin to pile up and you can’t afford the basics, you’re in danger of making fiscally reckless decisions just to make ends meet.
You’re working constantly.
If you can’t afford to take a day off, or you’re working a part time job in addition to a full-time gig, you might be in worse financial shape than you think. It’s important to take a step back, if you can, and take care of yourself first. Otherwise, you’ll be too burnt out trying to pay your bills to even begin chipping away at your larger debts.
You don’t have a budget.
If you think that tracking your spending isn’t important and you’re not making headway on your debts, you’re not going to progress very far toward financial freedom and security. Keeping something as simple as a spreadsheet is crucial so you understand where your dollars are going, and put a stop to pesky habits that eat away at your bottom line.