Signs That Your Personal Finances Need Help

Economic balance is the fundamental key to ensuring that our well-being is not affected by our personal finances. It’s no secret that living with debt and not making ends meet due to stress is harmful to people’s physical and mental health.

At times we think that there is nothing wrong with our finances because we have somehow managed to solve the unforeseen events, but have you asked yourself am I managing my personal finances correctly? Have you had the ability to manage your money in the best possible way? Or are you beginning to notice that your financial peace of mind is hanging by a thread? 

The main objective of obtaining healthy finances is that your expenses should never exceed your income, and you should know how to recognize the most common signs indicating that your personal finances need immediate help and attention.

If you identify with any of the situations described below, take a pause and start organizing your money right now before it’s too late and your debts are out of control. Here are some of the signs that indicate a lack of control of your personal finances: 

There is no clarity of monthly expenses (neither what you earn nor what you spend)

For BBVA, this is one of the pain points in finances; detecting these so-called “ cash leaks” is vital to know what, how, and when we spend our income and make better use of it. Remember to keep track of these small expense amounts because relying on memory to record all expenses is the least effective way to control money.

It is very easy to lose track between one purchase and another and to end up spending more than you can actually afford. The most advisable thing to do is keep a detailed record of everything that is spent and received in a month.

You can’t save

Many of you consider yourself organized, planned, and capable of solving any situation that may arise on a day-to-day basis. But, for others, this is a little more complicated than they can imagine; some trust that they can “shop or indulge themselves” using the little money they have as an emergency fund.
According to Money.com, this is one of the worst examples of running out of control of their personal finances and living beyond their means. Having savings is a fundamental part of financial stability. It allows you to use the money to pay for unplanned expenses or emergencies that may arise.

You don’t have an emergency fund

When it comes to an emergency fund, YES! We are talking about saving, saving, and saving. It doesn’t matter how small your savings are, as it will serve as a financial buffer. Unexpected expenses can turn into a disaster if a person is not prepared to face them and get out of extreme situations.

You have bills that you have not yet been able to pay

This happens a lot when debts exceed your portfolio, you no longer know how to pay or where to start paying your card bills, and now you only have enough to cover the minimum amounts of your account statements. Aggravating the situation further is the use of credit cards as an extension of salary to continue borrowing. IT’S TIME TO STOP!  

Generally speaking, everything that we find difficult we leave until the very last moment, but that inevitably affects our personal finances in the short and long term. What is the solution? Identify the situation and gradually incorporate healthy financial habits that allow us to organize the payment of our bills and obligations. In this way, you can always be subject to credit. 

You have no investments or financial goals

When there are no clear or defined objectives, there is no way to achieve our goals. We cannot leave everything to chance. You must set goals that allow you to expand your income, which will enable you to keep saving and investing. Your purchasing power can be affected by inflation, and the money you save will be of little use. 

Saving to invest is the best option for your economic freedom and that of your loved ones.

Be careful with bad debts

From an expert in personal finance, having a bad debt is fatal. Many people buy items that they probably do not need and then get into debt in such a way that they later do not know how to pay or aren’t able to pay. 

The more we have, the more we spend? Or do we spend more than we have? 

And although we want to focus on what is important, sometimes we spend too much. If we don’t have restrictions on spending money, we end up thinking that we will always use it for things that are important to us. So, be very careful not to fall into debt that will not provide the financial freedom you want so much. 

Taking care of your finances serves to meet financial goals and have a more secure future. If you identified with any of these signs, do not panic, you still have time to find a solution to put your personal finances in order. 

Here are some tips to help you take control of your financial life:

1. Make a spending plan or budget:

This may be very basic for many people, but it is a reality that we must accept. The best way to have control over our finances is by monitoring monthly income and expenses.

You can use digital tools to help you with this follow-up, such as a computer or phone apps, an Excel document, or perhaps a notebook you have at home, which better suits your lifestyle.  

If you do not know how to make a monthly budget, we invite you to read the following article: How to make a personal budget? Make it easy with this template. Download it for free!

2. Educate yourself financially:

You don’t need to be a financial expert to keep track of your money, but research could expand your knowledge, give you some tips and critical tools for the success you want so much. The more you know about your finances, the more confident you will be managing your money for the long term. 

3. Review your credit regularly:

It is necessary to keep your eyes open regarding financial status. That means regularly  checking your credit to know how much you are spending and how much you have available. Create the habit of checking your credit history at least once a year to confirm everything is in order.

Also, review your bank accounts at least once a week, which can help you settle your debts in order of priority.

4. Save and invest:

Establish a savings goal for your personal finances that motivates you to not fall into the temptation to spend it. This will allow you always to have a financial cushion.

If you are going to invest, do it in a diversified way. As the saying goes, “you shouldn’t have all your eggs in the same basket.” Diversification is essential as long-term investment risk will decrease, and the results will be very positive.

5. Automate your payments:

Technology makes it easy to manage finances. You should look for options that make most of the process automatic. It helps to avoid stressing about paying bills on time and generating extra interest or additional late fees. Another option is setting an alarm on your calendar with the important payment dates. 

Responsibly managing your finances is not only about securing the future but also about achieving short, medium, and long-term goals. How determined are you to improve your quality of life?