3 Signs Your Finances Need an Overhaul

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You might think you’re doing OK financially, but these red flags should tell you the opposite.

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How much time do you spend thinking about money? Maybe it’s something that crosses your mind once in a while. Or maybe it’s something you stress about on the regular. Either way, the healthier your finances are, the more secure you’ll feel. But if any of the following scenarios apply to you, consider it a sure sign that your finances are in need of a serious makeover.

1. You’re not saving any money

You need savings for a variety of purposes — emergencies , retirement, and other life goals, such as buying a home. If you can’t remember the last time you put money into a savings account , it’s time to rethink your approach to managing your finances.

Now, if you trust yourself to start spending more judiciously so that you’re able to ramp up on the savings front, then sure, give that effort a go. But if you’re admittedly bad with money, it may be time to start automating the savings process instead. In doing so, you’ll remove the temptation to spend, thereby guaranteeing that some of your income gets socked away for more important purposes.

You can automate your savings in a few different ways: You can arrange to have funds filter directly from your checking account to your savings account, or you can sign up for your employer’s 401(k) plan and have a portion of each paycheck set aside for retirement. If you don’t have access to a 401(k), you can instead find an IRA with an automatic savings feature, and secure those transfers that way.

2. Your debt load keeps increasing

Many people carry debt, especially that of the credit card variety. But if your debt keeps growing by the month, it means you’re either spending too recklessly, or aren’t being strategic enough about paying off what you owe.

If that’s the case, setting up an automatic savings transfer can help, because you can then use some of that money to pay down your current balance. At the same time, take steps to make your existing debt easier to eliminate so that you don’t keep accruing costly interest. To this end, you can look at refinancing your debt, or making a balance transfer to a card with a lower interest rate than what you’re currently paying. Just keep in mind that you’ll need a decent credit score for either to be a viable option.

3. You have no idea how much you actually spend on a monthly basis

You might think your cable bill costs you $84 a month when in reality, it’s $88. That’s hardly a big deal, but if you have absolutely no idea what your monthly expenses look like on the whole, consider it a wake-up call to start following a budget .

To set up your budget, comb through your bank and credit card statements from the past year to get an accurate sense of what your recurring monthly bills actually cost you. Then, factor in once-a-year expenses, like annual license or subscription fees, and compare your total spending to your total earnings. If there’s nothing left over for savings or, worse yet, you find that you consistently spend more than what you earn, then you’ll need to revisit that budget and lower your spending in one or several categories. But having that budget in place will clue you in to where your money goes so that you’re better equipped to spend it more responsibly.

The more attention you pay to money matters, the less likely you are to overspend, rack up debt, neglect your savings, or uphold other unhealthy habits. If you need help managing your finances, there’s always the option of working with a financial planner or adviser. You don’t need to be rich to go this route; you just need to be willing to admit that you could use some professional assistance.

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