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5 signs that show you may not be as good with money as you think

1. You don't know how much you earn or spend
If you do not know how much money enters your bank account every payday, you are at risk of overspending. Surprisingly, we do meet people who cannot tell us how much they earn – if you don't know how much you earn, how do you know how much you can spend?

To keep track of your income and expenses, it can be a great idea to create a basic budget. Knowing how much you earn and spend can highlight how much you could potentially save or even invest.

2. You are delaying saving for retirement
Speaking of saving and investing, retirement may creep up on you faster than you think. Even though it can seem like it is far away, the concept of compound interest shows that the earlier you can start saving, the better.

3. Your bills take you by surprise
Life can have unexpected expenses, such as an expensive car repair bill or even a vet bill. If you are in the habit of living month to month, an unexpected bill can throw out your expenses for the month. To overcome the difficulty these surprises can have, it is a great idea to not only spend less than you earn, but to have an emergency fund. Usually an emergency fund equivalent to three months of expenses is suitable for most people.

4. You have credit card debt
Credit cards are notorious for carrying a high interest rate – if you are not in the habit of repaying your credit card debt before the end of the interest free period. Having this type of debt can prevent you from saving for your future and clearing this debt should be a priority.

5. You do not understand your insurance policies
For some people, their insurance policy is on a 'set and forget' mode. But for many, this may not be the best approach – or most cost effective.

As our lifestyles change, so do our insurance needs. We have found with our clients that typically, a life event such as changing jobs, moving house or having a child, happens every five years. Reviewing your cover in line with a life event will ensure that you are not only familiar with the cover you have, but have the right cover in place for your life stage – with the added bonus of making sure you are not paying for something that you do not need.

If you would like more information on this topic please contact us on 0800 500 510

Image courtesy of Ambro/freedigitalphotos.nat


 

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