Learning to manage your finances is one of the most important skills you can learn. Yet, it isn’t taught in school, and many people of all ages struggle to meet their financial goals, budget, and save of the future. The first step to taking control of your finances is to realize you need help with financial management and debt relief.
Here are some key signs that indicate it’s time to seek professional financial help.
1. You Don’t Have an Emergency Fund
Having an emergency or “rainy day” fund will enable you to feel more secure financially and weather storms that may come your way. You never know when you’ll have a big vet bill or need a new furnace. Neglecting to have an emergency fund can lead to your finances spiralling out of control when unexpected expenses occur. If you can’t seem to save any extra money—ideally 3 months’ worth of expenses—because you’re paying off too many current expenses or debts, it may be time to seek guidance.
2. You Don’t Know How Much You Owe
You have credit card debt. A school loan debt. Perhaps a business loan to repay. And you also have to pay your mortgage and your car loan. How much does it come up to? How much interest are you paying? If you don’t know the answers to these questions, you need a firmer grasp of your financial situation to ensure you can stay in control.
3. Your Credit or Debit Card Is Regularly Declined
You should admit you have money management problems if your cards are regularly being declined, even for small, regular purchases. This is a sign that you’re either struggling to keep to your budget or purchasing things you can’t afford. A professional can help you more effectively manage your money.
4. You Have a Low Bank Balance
You likely know that having insufficient funds in your bank account at the end of the month is risky. However, you may think that because you’re ending the month with money in the bank that you’re financially stable. Having a bank balance under $100, however, means you’re living paycheque to paycheque. You could likely benefit from professional money management to help you get on a better financial path.
5. You’re Using Savings for Daily Expenses
Your savings should be more or less left untouched. This money should be used for an emergency fund, for large purchases you’re saving for, or for your future. Dipping into these savings regularly to pay for your typical daily expenses means you’ll soon be out of money and living paycheque to paycheque again.
6. You Can’t Pay Off Your Credit Cards
Every month, you pay the minimum payment due on your credit cards. Maybe you’re not even paying the minimum. This is a bad sign. Your debt will soon start to spiral out of control. Credit cards shouldn’t be used for day-to-day purchases if you do not have the money to pay off the cards completely at the end of the month. Remember—it’s not free money. You will need to repay these debts in full, with interest. Professional financial management advisors can help you find debt relief.
7. You’re Taking Out Personal Loans for Inappropriate Reasons
Personal loans should be used only for specific reasons, such as to consolidate your debt or pay vital expenses you couldn’t afford otherwise. They should not, however, be used to afford tropical vacations or other non-essentials. Taking out personal loans for the wrong reasons will put you deeper in debt. Talk to the experts to determine if a better option exists before you take out such a loan.