It can be tough to manage finances and many of us will spend more than what we can actually afford as we have access to credit like credit cards.
If you want to have stable finances now and in the future, then you need to keep your spending habits in check. You are already probably spending more than you should and many of us will deny that our spending is out of control. Here are 3 warning signs that you are spending too much and more than what you can afford.
You Don’t Have a Budget in Place
Do you have a budget in place? Do you need one? If you don’t have a budget in place, then you probably don’t know exactly what money is coming in and what money is going out.
You need to have a realistic budget in place that shows what money is coming, what money needs to be used for bills and how much you have left after everything has been paid. A budget can help you to see where you stand financially and help you plan for your long-term goals like retirement, buying a house and so on.
With a budget, you can track your spending and you will be able to see where you can make cutbacks if you are spending more than you can afford.
Go through all your expenses, make cuts and get your income inline with expenses, so you can live comfortably and within your means.
Your Expenses Exceed Your Income
The cost of living has gone up and the key to financial stability is to have more money coming in than going out.
Make a list of your fixed and variable monthly expenses like groceries, insurance policies, memberships etc. The total should not be more than what you are earning per month.
If more money is going out than coming in and you don’t plan on making cutbacks, then you will end up in financial trouble. You need to cut back so your income covers all your expenses.
You Are Only Paying the Minimum
Credit cards can make life a little easier for some and for others they have made life a misery. This is mainly due to them not being managed properly. It’s always nice to have the latest piece of tech or the latest fashion, but if you are using your own money for these items, then you are spending what you have. However, if you use a credit card then you are essentially borrowing the money and it needs to be paid back.
If you are using your credit card to fund your life and you are spending too much on your credit card then you could be in a financial pickle, especially if you are not able to pay the balance at the end of the month. You are essentially spending money that you don’t have and if you can’t clear the balance then you are probably making minimum payments which will pay the interest on the outstanding balance, but doing it this way can mean it can take years to pay off a credit balance.
You can use a personal loan to consolidate out of control credit card debt, which involves combining your debt into one, so you have only one lower monthly repayment to make, which will make multiple credit card debts easier to manage.
There are times where you may need to spend more money then you have like if there is an emergency. However, you always need to analyse your financial situation, look at your spending habits and see what you can afford. If you do need to borrow money, then you will need to factor the repayment into your budget and this may mean you need to make sacrifices until the loan is paid off.
You can reach financial stability and it’s all about knowing your money and what you are spending and trying to curb your spending habits.