No one likes to think of being in financial trouble. But the truth is that many people who aren’t ready for or expecting financial trouble often find themselves ignoring some of the most common warning signs. If you’re not sure whether these warning signs apply to you, read on to learn more about the red flags you should look for to indicate trouble in your finances.
1. Not paying your bills
This may seem obvious, but when you begin to skip bills, it often has a snowball effect: the next bill is higher, and the next one is even higher, and you can find yourself in a lot more debt within a matter of months. If you notice that you are skipping bills or even just pushing back on paying them until they are overdue, it’s time to look at your budget and see what you can change. If you don’t feel there is anything you can cut out or reduce, it might be time to consult some financial experts.
2. Over-drafting your bank account
Are you constantly getting notified that your bank account has reached zero dollars, or even less? That is a red flag you will not want to ignore. Overdrawing your account once by accident is one thing, but doing it regularly means you have to make some changes. Either you are not putting enough money in to cover your bills, or you are going overbudget pretty often. Whatever the case, it’s time to put a stop to it. Ask your bank if they offer any type of overdraft protection service to keep you from hitting that $0 on the regular, and then see what changes you can make each day to maintain the funds in your account.
3. Not tracking your spending
If you are constantly surprised by the number of dollars in your checking account, even if it isn’t a low number, that isn’t a good sign. Even those people who have plenty of financial resources to spare will tell you that tracking that money is essential to making sure all your needs are covered. You may think you can keep up with every bill and charge and expense in your head, but the truth is that you just can’t. Balancing checkbooks is not exactly in vogue anymore, but there are plenty of ways to keep up with your finances, especially if you use a bank that allows you to track your balance online.
4. Living for the next paycheck
There is an increasing amount of people who live paycheck to paycheck—that is, they spend all the money they have and must wait for the next paycheck to be able to make any more purchases. For some people, this is a daily reality that cannot be changed due to extenuating circumstances. However, for others, this is an opportunity to look for ways you can cut back on your spending. Think of it as a game or experiment: how creative can you get to save even a few bucks from each of your paycheck? Can you make more meals at home, or pare down your streaming services to just your favorite one? Much like debt tends to snowball quickly, you’ll be surprised at how you can start saving money with just a couple dollars and watch that amount grow over a few months.
5. You don’t have any financial goals
Do you have a lifelong dream of going to the Caribbean? Do you want to own your home one day, or buy a new car for the first time ever? Many people who have goals like these have an easier time saving up their money, because they are motivated. But if you don’t have a goal, it’s much harder to save, and you are in more danger of running out of funds.
Your goal doesn’t have to be extravagant. You can make it something small to start, like treating yourself to a spa weekend if you have saved a certain amount of money every month for six months. As you watch your savings grow, you might find that goals grow, too—it’s all about believing what is possible and being motivated to make it happen.
In a perfect world, we would never have to worry about money. But since we do have to worry about it, take some of the stress off your shoulders by managing your money the smartest way you can. Know your financial limits, set some goals for your spending, and see if you can turn these warning signs into a cautionary tale that no longer applies to you.
