Are you living beyond your means? Financial red flags to look out for
Conspicuous spending now seems to be a way of life for most of us. The ease of acquiring things on credit, the thinly disguised bragging on social media networks, and the stress of modern living all contribute to the temptation to spend more and more. Even kids these days have very expensive playthings; it’s not uncommon for a middle-class preschooler to have her own iPad or gaming system. But in the midst of all this spending, take a moment to consider whether it really is something that you can afford. With the pressure to keep up with the ubiquitous Joneses (who are, in most likelihood, also having money troubles of their own but are just too embarrassed to admit it), are you digging yourself into a financial grave? Below are some red flags that should serve as a wake-up call: Red Flag #1: You live from paycheck to paycheck. Do you find yourself waiting anxiously for the next payday just so you can get some groceries or pay a bill? When there’s a hold-up with the release of your salary (even for just a day or two) does it throw your entire month’s budget out of whack? If this is happening to you despite earning a more than sufficient income then it’s time to overhaul your spending habits. Think seriously about ways to start building up a money buffer so that you will always have funds to meet typical household contingencies. Think of your savings as priority expenditure rather than an afterthought. Living from paycheck to paycheck is unnecessarily subjecting yourself to a lot of stress. Red Flag #2: You dread looking at your bills and credit card statements. Denial and avoidance are major signs that you are getting into financial trouble. It usually happens when you already have an idea that your spending is getting out of hand. But trying to put everything out of sight is not going to make them disappear. Red Flag #3: You don’t know exactly just how much your debt is. Sometimes, people try to pay attention to nothing but the most immediate money concerns. They may be good at getting bills paid on time but they ignore the more substantial debts that are always lurking at the back of their mind. Getting a clear idea of where you are financially is the first step to planning long-time; debt can only get more and more out of control the longer you don’t face it head on. If you find that a significant chunk of your income goes towards overdraft fees and interest, sit yourself down and think of permanent solutions. Continuing to pay money on overdrafts and interest is throwing money away; you can work towards zero debt goals if you are determined enough. Red Flag #4: You regularly get behind on your bills, or even having utilities disconnected. By the time this starts happening to you, you should definitely think seriously about living a simpler lifestyle or getting another source of significant income. Like food and rent, utility bills should be the first things that you pay every month and if you are having difficulty meeting these every month, then that’s a problem indeed. It’s not easy to live with financial anxiety looming over your head. Surprisingly though, people who live in debt are often reluctant to take the first steps towards working themselves free of stress and anxiety. The prospect of downgrading your current lifestyle can be intimidating at first but after a while, you will realize that you never really needed most of the things that you once thought essential. Once you’ve gotten everything in order, be very careful not to put yourself back in the same lurch. Cultivate an attitude of waste not, want not and develop money-savvy ways that will still let you enjoy quality at a good price (for instance, buying clearance mattresses UK instead of paying through the nose for retail floor models).