If you can handle paying your bills each month, you may assume that you are in perfect financial health. However, there are often serious financial issues lurking just below the surface. Many money problems can worsen over time without any notifications ending up in your email inbox. Each serious issue causes a number of small signs to appear. Keep an eye on your finances by looking for any of these trends in your spending habits or bank balances.
The Top 3 Most Serious Signs
Sit down with your pay stubs and compare them to the amount you spend on rent or mortgage payments each month. If your home payments use up 30% of your take-home pay or more, you need a financial makeover. It can be nearly impossible to save enough for emergencies when your rent is 40% or 50% of what you earn. You may need to pick up another source of income or find a more affordable place to live. Refinancing with the help of MoneySupermarket.com can also help.
Pulling out your credit card to pay bills is a bad sign, but it is even worse if you are paying off one credit card with another. Transferring the balance of one card to another with a lower interest rate is a useful trick for cutting debt. Paying a monthly minimum payment with another card means you need a financial makeover immediately.
Failing to track your spending and check your bank statements is another warning that you are sinking into financial trouble. You need to balance your checkbook or make notes on credit card balances to avoid over-drafting your accounts. There should be no reason to avoid opening mail from your bank.
Other Bad Signs
Living paycheck to paycheck is a reality for many families, but it should only happen during emergency periods. A financial makeover can help you balance out your living expenses and your income if you can’t break the cycle on your own. Everyone needs to have emergency savings and a little extra each month for retirement.
Tracking your spending on entertainment, dining out and other non-essential expenses may surprise you. Spending more on these extras every month than you save for the future is usually an indicator of imbalanced financial goals. This is especially true for people who will reach retirement age in the next 10 years. Putting away more than you spend ensures you have plenty to cover your costs during the rest of your life.