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.
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