6 Signs Your Financial Health is in Trouble

Think you’re doing ok? Take a look at the list and see how you feel when you get to the end. Need help? I know some guys.

Emergencies will happen. Are you ready?

You have no (or too little) emergency fund

The Federal Reserve’s Economic Well-being of U.S. Households Report (2018) showed that 4 in 10 Americans didn’t have enough money in their emergency fund to cover a $400 unexpected cost.  

A good start is a small emergency fund of about $1,000, typically.  This is sufficient for most of the unexpected costs that you may face, like needing new tires or water heater.  Having this money set aside for these instances will help keep from totally wrecking your budget, or worse, having to choose which bills to pay (and likely accruing late fees).

Ideally, you’ll get to where you have an emergency that would cover living expenses for 3-6 months.  According to CNBC, only about 18% of Americans have this money set aside.

How much is that vacation really costing you?

Vacations rely on potential money/credit cards

We all want to take a break and escape the mundane day-to-day.  But if you have to rely on bonuses that you may get or a raise that you think you have coming to you in order to pay for the vacation, maybe you really can’t afford it right now.  

Similarly, if you pay for the vacation with your credit cards and you are still trying to pay it off months after the vacation, you didn’t actually have the resources to go on that trip.  These type of decisions will keep you in debt (and in denial of your real money situation).

Where’d it go? I dunno

You don’t have a monthly budget

How can you even begin to have a conversation about how your doing with your money if you don’t have a budget/tracking system?  A budget is the single most powerful tool to win with money. Tracking expenses will expose areas of opportunity for saving money.  A budget tells your money where to go each month. If you don’t tell it where to go, you end up wondering where it went.

It’s not good to be above average on this one

More than 30% of income goes to housing

Regardless if you buy or rent, live in a house/apartment/condo, if you are spending more than 30% of your take-home income on your shelter (including taxes, insurance, etc), then you are likely living beyond your means.  While you may be able to pay the expenses at a higher percentage, chances are that you are leaving no room for your budget to grow.

Same ol’ same ol’

You haven’t made a dent in your debt in the last year

If your debt is the same, then you need to re-evaluate how you are using your money.  If you can only afford the minimums on the credit card payments, you are spending too much and need to look at, ahem, your budget.  You don’t have to live with revolving debt. You just need to decide that you have had enough of the debt merry-go-round and take a long, honest look at your behaviors concerning money.

Is there a discount retirement plan?

What retirement fund?

If you haven’t started saving for your retirement, it isn’t too late to start, and you need to get on it.  The thing the best helps money grow is time. Just ask Warren Buffett. The longer you wait to get started, the more you will need to contribute each month to meet your goal.  A startling statistic that 1 in 3 Americans has less than $5,000 saved for retirement suggests many of us aren’t doing as well as we might think.

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