You may think you have good money management skills, but if you are totally honest with yourself, you’d realize that your money management skills needs improving. Getting your personal finances right can make your life a lot easier. You’re less likely to live paycheck-to-paycheck, and you’ll maintain a strong financial foundation.
Here are some tell-tale signs:
YOUR BILLS ARE PAID LATE
Late payments add up quickly. To avoid a penalty, always pay bills before or on their due date.
To stop late payments, make a note of due dates as soon as these bills arrive. Set up automatic bill pay to make sure payments reach creditors by the due date. By doing this, you also avoid being in debt.
YOU BORROW MORE MONEY THAN YOU SHOULD
If you never have enough cash to get through the month, it’s time to revamp your finances. Get to the root of the problem. Are you overspending? Are you living above your means? Do you have a budget?
If you have more bills than income, downsize and free up cash. But if you’re simply overspending, creating a budget and reducing how much you spend in certain areas can ensure enough cash flow.
YOU HAVE NO EMERGENCY FUND
How much do you have in the bank for a rainy day? If you don’t have a cash backup, there’s a good chance you’re not managing your money properly. You might be living above your means or you might overspend each month, which leaves little cash for saving.
Going forward, always pay yourself first. When you get your paycheck, deposit money into your savings account and start building your cash cushion. Ideally, you should save at least 10% of your income.
YOU HAVE NO IDEA WHERE YOUR MONEY GOES
This is a top reason for overspending each month. This goes back to creating a monthly budget for yourself. A budget is a spending plan that guides your money. You can decide how much to spend in different categories, such as transportation, food, entertainment, etc.
Balance your checking account on a regular basis to make sure you’re not overspending, and make adjustments to your spending plan as needed.
YOU HAVE A BAD FINANCIAL REPUTATION
If your family or friends feel you’re bad with money, their opinions just might be true.
Get advice from people who have a good healthy spending habit, and then take steps to reverse your bad financial lifestyle. A budget, careful spending and learning good credit management provides the skills you need to fix your financial situation.
Nobody is born knowing how to manage their money, but through trial and error you can learn techniques to build a strong financial foundation. What are other sign of improper money management?