Are you spending too much? Maybe you’ve missed a few bills or you’re living, mostly, paycheck to paycheck. Or, perhaps you just have this underlying feeling of guilt whenever you splurge on something at the mall.
Whatever it is, before your financial health completely comes undone, there usually are warning signs that something isn’t quite right and your spending has gotten a little out of hand.
Here are five red flags that you are spending too much -- and how to fix them before they completely upend your finances.
You have no budget.
If you don’t have a budget, you likely do not have a solid idea how much money is coming in through your paychecks and other earnings and how much is going out. Not being aware of the realities of your finances can quickly set you behind.
A budget can ensure that you’re able to pay your bills now. It also makes it possible for you to set long-term goals, such as saving for a down payment for a house, putting away money for your child’s college education or squirreling away money for retirement. A budget can also prevent you from spending too much, because you’ve already planned for how much you are able to afford in each of your spending categories.
Ready to build a budget, but not sure where to start? Check CESI’s chapter on budgets in our personal finance guide.
You only make minimum payments.
You might have purchased your new skirt for a great deal -- 75 percent off retail, for instance. But when you pay for that skirt with your credit card -- and then don’t pay off the credit card bill each month -- the cost of that skirt grows as the credit card company charges you interest for using that card. And those numbers can add up fast, especially if you make only the minimum payment on the card.
NerdWallet recently did the math to determine how much more a credit card holder might owe if they made only the minimum payment on $6,081, which is the revolving credit card debt owed by the average household. Those paying just the minimum accrued $4,063 in interest. When that consumer doubled the minimum payment, they cut the interest accrued to $1,509.
If your credit card bills are overwhelming, it might be time to consider debt consolidation.
You frequently go on spending sprees.
A fun treat every now and then is fine. But if you’re guilty of impulse shopping, it’s time to clamp down. Spending sprees can quickly spiral out of control. Before you know it, you’ve blown through whatever money you had for bills and other necessities.
As you build your budget, if you can, be sure to include a little fun money to spend on a new pair of shoes or a movie out with friends each month. Otherwise, stick to your budget. If your find that you are frequently spending too much and you can’t seem to control it, take the steps now to determine if you need help for a shopping addiction.
Your savings aren’t growing.
Do your monthly bills leave you no cash to sock away in your emergency fund or retirement account? Or, are you constantly pulling from your savings to meet your monthly obligations? In both cases, it’s time to reevaluate whether you are spending too much and start cutting back, so that you’ll have money to fall back on in the case of an emergency and when you’re ready to retire.
You’re frequently anxious about money.
If you’re constantly stressed out about your finances, ignoring them will just make them worse. Instead, address the issues straight away. Make a plan and get the help you need, perhaps through credit counseling.
Getting on track with your finances can seem insurmountable, but with the right tools and help, it’s possible to return to a better path.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.
Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
CESI is NOT A LOAN COMPANY