Mismanagement of finances is very critical if you want to achieve financial freedom and sadly, Personal Finance is not a subject that is taught in school that is why so many people are clueless as to how to manage their own money. . Here are the signs you might already be demonstrating bad financial behaviors. It may be sooner but if you experience any of these signs, you will most likely find yourself in financial trouble. You should never ignore any of these signs. As soon as you become aware of these things happening in your life, take immediate action to correct your financial woes.
1. You Don’t Have a Savings Account
People in financial mess do not have emergency funds so they borrow money for such cases, they take a loan or cash advance, and as a result, incurring more debt, so It is important for everyone to have a savings account for them to create their emergency fund that should have at least 3-6 months’ worth of income to cope with emergencies or unexpected exigencies. We should keep in mind that savings is an expense, and should be budgeted for just like any other expenses.
2. Making Payments with Credit Card.
When you use your credit card to make payments on other bills, you are playing a high-risk game because you’re not only paying bills with money that you don’t have, you will end up paying more in the end because of the interest you accumulate from your credit card company.
3. You keep on waiting for your next Salary.
When you received your salary, you spend it with getting expensive gizmos, overpriced coffee and buying all the unnecessary things. Heck after spending a lot, you are surviving with a few pesos for food and transportation every day until your next pay day. It’s not yet too late to learn the art of delaying gratification. If you can’t afford the things that you want, wait until you have enough cash/savings to pay for it. If you are a young and single professional without any worries in life, it wouldn’t be impossible for you to set aside even just P1,000 monthly as your saving staple.
4. Counting on future raises to bail you out
For one thing, you can never be certain you will have increased income in the future–you can’t even be certain you will have a job. If you are counting on income increase and it never happens, you are guaranteed to have future financial difficulties. Future raises are for future expenses. Just make sure you plan your spending based on your current income. Basing your plans for financial stability on a future payoff, such as, a run-up in the value of your home, inheritance from your parents or a big tax refund can put your finances in awful paths.
5. Overdue bills
Try to pay cash for everything you buy; but if you are going to borrow money, make sure you are only buying things you can easily afford the payments for. Give up luxuries in your life that are requiring too much of your income–a luxury item can be anything that is nice to have, but you don’t actually need that in order to live a happy life.
Avoid messing up with your finances and start keeping track of your expenses which should never exceed your income. List down where you spend your money on a given month and see which portion of your expenses that can be cut back. Use your money to create a secure financial future, instead of spending it on material possessions, will give you a feeling of freedom and peace of mind that expensive gadgets/things never deliver.
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