Let’s say you’re keeping up with debt and bill payments, have some savings, and can afford to fund all your expenses.
While you’re not doing anything wrong with your money per se, you may not be doing enough to manage it correctly.
Being intentional with your money is tricky. Too often the bigger picture of your finances can get lost in the details and detours of everyday life.
Here are a few red flags that your money management might be getting off-track, along with a few tips for re-prioritizing your finances and getting back on course.
1. You don’t check account balances
Everyday money decision-making relies on knowing your account balances. That can range from knowing what you owe on a credit card to what you have in the bank.
Neglecting your accounts can lead to issues like overdrafts, overspending, or incurring a balance-based fee (like a monthly checking fee). However, staying aware of the state of your accounts can help you make smarter decisions.
For instance, when people check their accounts before deciding on a purchase, about half the time they skip the expense, according to a 2015 Consumers and Mobile Financial Services report from the Federal Reserve Board.
If you’re not in the habit of checking your accounts, using a money management tool like Mint can make it quick, easy and convenient to get an overview of your money at any time.
Setting up automatic alerts can also keep you up-to-date on account balances, upcoming payments, recent transactions or security issues.
2. You give in to spending impulses
“I’ve worked really hard, I deserve to treat myself.”
“Life is so stressful right now, I just need some relief.”
“It’s a Saturday night and I have nothing to do. Maybe I’ll go shopping.”
When you’re stressed, bored or feeling low, your brain’s reward center usually looks for something new and shiny to give it a boost.
Yet, if you give into the spending impulse and make money decisions based on what feels good right now, it’s often at the expense of healthier or long-term money goals.
The next time you find yourself thinking of spending to give yourself a boost, try flipping the script.
When “I deserve it” pops up in your mind, counter it with truths like, “I deserve guilt- and stress-free money management. This ‘treat’ doesn’t really fix anything.”
3. You’re living paycheck-to-paycheck
Another big issue is spending money as fast as you earn it. This usually has two causes: spending that’s too high or income that’s too low.
If you earn enough that basic living expenses are between half to two-thirds of your take-home pay, yet you’re still zeroing out your earnings each month — that’s an issue with spending.
Take stock of your habits, distinguish between wants and needs, and start practicing disciplined spending.
If nearly everything you make goes to rent, transportation, food and other costs of living, the problem is likely your pay. See if there is any way you can make more money at your current job, or consider picking up side jobs.
You may also want to consider getting more job training, experience, or education that boosts your earning potential.
4. You’re only paying the minimums on debt
It’s important to stay current on debts. This will help you build good credit and avoid late fees or delinquent debts.
But if you’re in debt, especially high-interest debt like credit cards, it’s possible your minimum payments are barely covering interest and not doing much to lower what you actually owe.
If you’re just paying the minimum, you’ll pay lots of interest for no good reason.
Start stepping up your payments each month. Even if it’s just an extra $10, it will help you move towards getting rid of debt and saving on interest.
5. Your savings account is anemic
If you have less than $1,000 in a savings account, then you’re in line with 69 percent of Americans, according to a recent survey from GOBankingRates.
Without savings, you’re at the mercy of whatever life throws at you. When faced with a big expense that can’t wait, like a car repair or emergency room visit, you’re more likely to get backed into debt.
With interest thrown in, these big costs get even more expensive.
A painless way build up your emergency fund is to earmark extra income, such as bonuses or a tax refund, for your savings account. Automating a transfer to your savings account each month and getting it out of the “available” cash pool in your checking account can also help.
6. Your money habits cause conflict
A 2014 survey from the American Psychological Association (APA) found that money is a common source of conflict in relationships. This is especially true for partners or other people with whom you share financial responsibilities.
When there is financial conflict in a relationship, it can be a sign that something might be off with your financial values or money management.
If your poor habits are negatively affecting others, you need to directly address the issue. Stay open to new ideas or suggestions, avoid getting defensive, and consider the other person’s perspective.
These attitude shifts can turn a money conflict into a helpful discussion and raise your awareness of where you could compromise and improve.
7. Your finances stress you out
Money and work were the top two sources of stress for Americans in 2015, according to the APA’s Stress in America report.
Feeling stressed might prompt you to turn to unhealthy money behaviors to cope like retail therapy or procrastinating on bills. These behaviors do nothing to address financial problems and often make them worse, leading to a cycle of more stress and mistakes.
Stress also eats up emotional and mental resources that are needed to find solutions to money issues or change problematic behaviors. That makes it much harder to improve and make positive changes to your finances.
The best way to stop the stress cycle is facing your money issues head on. However, it is easier said than done, so start small. Take on one manageable task at a time.
You should also consider asking someone you trust to help you troubleshoot your finances and get an outside perspective on your problems. Or, even better, hire a certified financial planner and get a professional’s help.
By acknowledging these seven financial red flags and taking action to overcome them, you’ll find yourself demonstrating better money management skills in no time.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|