Am I in money trouble? Sadly, this is a question plaguing, well, a lot of us.
If you’re asking yourself the question, it’s probably because there are red flags popping up in your daily life, whether you’re missing bill due dates, borrowing money, or turning to loans.
Instead of ignoring these flags, as so many of us are wont to do, we highly recommend you take charge of your finances, once and for all. It’s an awful feeling to be anxious about money, and once the signs start showing, it can be seriously tempting to ignore, ignore, ignore.
Instead, we recommend you check out the signs below and have a read through for our tips on your next steps if you’re struggling. It’s time to wade out from under!
1. You regularly run out of money before pay day
One clear sign you’re not managing your money properly is when you regularly find yourself running out of moolah before pay day rolls around.
This essentially means you’re spending more than you earn.
Now, this can happen to everyone, on occasion. Where it becomes a problem is when you find it’s happening more often than not and impacting your daily life.
If this is you, it might be time to think about ways you can cut back on your daily spending. You could think about starting a budget — for example, the 50/20/30 budget. You could trawl through your expenses and look at where you could make changes. For instance, do you really need to grab a soy latte every morning when your office offers free coffee?
The tricky here is to make changes before it’s too late.
2. You don’t have any savings
If you were at a bar and someone stole your iPhone from your bag, what would you do?
Well, maybe you have insurance, and that’d be great. You’d be able to contact the insurance company and hopefully they’d issue you with a replacement pretty quickly.
But for those of us without insurance, we’d probably only have a couple of options.
- Option A: We could go without a phone — but that seems unfathomable in this day and age.
- Option B: We could sign up to a new plan with, say, Telstra or Optus, and start paying off a new phone over the course of 24 months.
- Option C: We could buy a new phone.
Now, it’s possible that going without a phone or signing up to a contract is appealing to you in this situation, which is perfectly fine. But if these ideas won’t work — because you have to have a phone or you can’t sign up to a contract — then you’re stuck with Option C.
In this case, you’re going to need savings.
And if you don’t have any savings, this could be a sign you’re heading towards money trouble.
It’s not just about new phones.
Having an emergency fund is the best way to ensure you can get yourself out of any tricky situation — whether it’s a lost phone, emergency wisdom tooth removal, urgent car repairs, a reduction in work hours, or even something serious such as a domestic violence situation.
3. You have trouble paying down “bad” debts
If you have any kind of “bad” debt — that is, debt that is costing you money without improving your financial position — your best bet is usually to pay it down ASAP.
If you’re having trouble keeping up with these payments, this is a likely sign of trouble.
Some might say that even paying just the minimum payment is a bad sign. That’s because if you just were to pay the minimum payment on, say, a credit card debt, you could spend years paying it off and you might end up paying far more than the original debt because of the interest accrued.
Beyond that, though, there are other signs you might be struggling, such as:
- If you’re struggling to make payments at all.
- If you’re borrowing money (e.g. from friends or family members) to make your payments.
- If you’re opening new lines of credit (e.g. from a bank) to pay down debts.
- If you’re using one debt to pay off another debt (e.g. using your credit card to pay an Afterpay balance or refinancing your house to pay down a credit card).
If any of these situations rings an (alarm) bell, it might be time to start considering your options. You may need to, at the very least, address the root causes of your problems. Beyond that, you may need to speak to a debt counselling service and get expert help.
With all this said, there are instances where you might refinance your debts in order to pay down debt. For example, some people consolidate their debts — i.e. roll all existing debts into one loan — so that they only have one payment, one interest rate, one loan, etc. But this has its own set of risks and rewards that you’ll need to get professional advice on.
4. You ask friends or family members for money
This one is probably pretty self-explanatory. If you’re regularly asking your friends or family members to help you out — whether you need $5 or $500 — then you could have a problem.
We’re not talking about those occasions where you’re $5 short when paying for lunch or you leave your wallet in the office and need your friend to shout you a coffee.
It’s those occasions where you need your mum to pay your mobile bill one month and then your friend to loan you $20 for a jug of beer the next month. At best, you might just be disorganised and flakey. At worst, you could have a spending and/or budgeting issue.
If this sounds like you, perhaps it’s time to consider where the issue is with you and what you can do to fix this problem before it gets out of control.
5. You’re ignoring any or all signs you have money trouble
Last, but by no means least, you may have a serious financial issue brewing if you’re generally ignoring all the red flags that have been popping up. This could mean:
- Not opening bills and bank statements when they arrive.
- Refusing to open your banking app.
- Getting nervous or anxious when talking about money.
There’s even a term for this: money anxiety disorder.
We totally get that it can be scary to get stuck into your money woes. But do you want to keep treading water (or risk going under) when you could start swimming instead?
If you’re struggling financially, we’ve outlined some debt counselling resources in Australia. You can also click here for access to an up-to-date list of resources, courtesy of ASIC.
National Debt Helpline
Phone: 1800 007 007: The National Debt Helpline is available from 9.30am to 4.30pm, Monday through Friday. Calls from mobile phones may incur a fee from the mobile phone carrier.
You can also visit the National Debt Helpline website for information and resources.
National Legal Aid
If you’re facing legal action over your debts, you may be able to receive free legal advice from a community legal centre. Visit National Legal Aid for more information.
Lifeline Crisis Support
Phone: 13 11 14: If you need urgent crisis support, call Lifeline’s 24/7 hotline.