There is nothing wrong with treating yourself from time to time. However, if you notice any of the following signs, you may be spending more than you should be.
Payment issues. If you cannot afford more than your minimum payments each month, it’s a clear sign that you’re spending too much. Similarly, if you find yourself with a stack of unpaid bills, this is a strong indication that you should cut expenses and rethink your finances.
Plastic only. A vital sign that you are overspending is if your credit card is the only payment method available to you. It is especially true if you often worry about your card declining or if you’re always hovering close to your credit limit.
You are shopping for the sake of it. Treating shopping like a hobby or therapy is common, but it can quickly become expensive. If your first reflex when bored or anxious is to hit the mall, you should probably re-evaluate how you spend money. New purchases lying around and going unused is another sign you need to curb your impulse shopping.
Problems saving. If you are unable to build up your savings or are dipping into your rainy day or retirement fund, it is probably time to ease back on shopping and write up a budget.
No emergency funds. If a layoff, medical problem, or another drawback would likely cause you to be unable to meet your financial obligations, it means you should start building some savings. If you can’t afford to do so, cut nonessential spending as soon as possible.
Your credit limit is too high. As a rule of thumb, your credit limit should be low enough that you could pay all of it down with your monthly income. If that is not the case, you might end up carrying an increasingly large balance, which can seriously harm your capacity to accrue savings.
Developing sound financial habits isn’t easy, but the first thing to do is get a clear picture of your financial situation, ideally with the help of a debt counsellor. He or she will also help you understand what options are available to you and suggest debt management techniques and solutions, such as developing a budget through credit counselling or working on debt consolidation.
For trustworthy debt management advice, you can turn to Fox-Miles & Associates Inc.
As a licensed insolvency trustee, we offer trusted, friendly, and non-judgemental financial help to people from Edmonton, St. Albert, Leduc, Stony Plain and more. Contact us today for a free consultation and to find your way to financial freedom.
