8 Signs Your Personal Finances are in Trouble

Congratulations on taking the effort to improve your financial situation.  Whether you find helpful personal finance information on this site or somewhere else, the fact that you’re even reading a personal finance blog is a big step in getting a handle on your money.

Are you on the road to financial hardship or financial success?

Are you on the road to financial hardship or financial success?

Today I’m writing to highlight some of the financial warning signs and red flags that suggests you’re not on the right track when it comes to managing your money.

1. You’re not sure of Your Checking and Savings Account Balances:

It goes without saying that staying on top of your checking account and savings account balances is very important.  This is especially true if you write a lot of paper checks or share an ATM card with your spouse.  Before we started religiously tracking our checking and savings account balances (download my free Excel checkbook registry), my wife and I were routinely assessed overdraft fees from our bank.  At $40 to $50 a pop, these overdraft fees can add up quickly.  Even worse, continually over-drafting your checking account can be a symptom of an even bigger problem.

2. You Can’t Speak in Detail About Your Employer’s Benefits:

Are you taking advantage of all the benefits your employer has to offer?  Surprisingly, many people don’t take advantage of the various benefits offered by the employer.  For more information on getting the most out of your employer’s benefits package, be sure to read my 2018 open enrollment benefits guide.

3. You Haven’t Started a Retirement Savings Account:

While I made many financial mistakes in my 20’s and early 30’s, the one thing I did do right was enrolling in my company’s 401K retirement program as soon as started in the workplace.  I cannot stress the importance of this enough.  It’s a lot easier to start saving early rather than waiting until later when you’ll likely have more financial obligations (kids, mortgage, car loans, etc.).

4. Unworn Clothes/Equipment:

Do you have an extraordinary amount of clothes or sporting equipment that have never been used?  Maybe clothes that still have the tags on them from when you bought them on sale 6 months ago?  Not only are you wasting your money that could be spent elsewhere, you’re cluttering up your home with stuff that you’re not using.  This is not a healthy lifestyle choice financially or otherwise.

5. Your Vehicle Are Worth More than Half Your Annual Salary:

One of the biggest signs you may be in financial trouble, and one that I talk about quite a bit, is that the total cost of all your vehicles (cars, trucks, boats, motorcycles, ATVs, RVs, etc.) is more than half of your annual household income.  That’s right, if you’re making $80,000, the total cost of all the vehicles you own should be less than $40,000 (and that’s pushing it).  If your vehicles are worth more than half of your annual household income, you should really consider downsizing; ESPECIALLY if you still owe money on these vehicles.

6. You Have no Emergency Fund:

Another red flag that you’re not doing so well financially is that you don’t have an emergency fund (at all).  Yes, I’ve mentioned in the past that it is preferable to have at least 3 to 6 months of expenses set aside in an emergency fund but many people don’t have any savings at all.

7. You Have Trouble Locating Tax Deductible Receipts When Doing Your Taxes:

If you don’t have a dedicated filing system to keep track of your important financial documents (tax receipts or otherwise), this may be a symptom of a larger problem when it comes to your personal finances.  One of the most prominent traits of self-made millionaires is their attention to detail in keeping track of their personal finances.

8. You Can’t Pay Your Bills Until You Get Your Next Check:

I know the feeling of living paycheck to paycheck all too well. When my wife and I first got married, there were many times when we didn’t have enough money in our checking account to pay that month’s rent, car payment, etc.  We had thought we “were doing OK” because we’d finally get paid and make the payment a few days late (but well within the timeframe before it is considered overdue).  We were able to solve this by carefully budgeting our money and coming up with a plan on how our money would be spent in the coming months.

Too Much Debt?  Download our free Trees Full of Money Debt Snowball Calculator and see how quickly you can pay off your debt.

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