According to a 2017 CNBC report, ten percent of people who make at least $100,000 a year or more struggle with financial stability. Another money report reveals that nearly half of all Americans live paycheck to paycheck. If you’re someone who is trying to stay afloat financially, you’re not alone. People of all wage-earning levels can show signs of financial instability. These signs point to a need to clean up finances, so stability and security can be recovered, which will lead to reduced stress, greater prosperity, and a healthier financial future.
1. You Don’t Follow a Budget:
Following a reasonable budget is a clear path to peace of mind when it comes to paying bills and saving money. A budget helps a person stay on track with spending, and people who don’t follow a budget often overspend. Overspending leads to primary bills not being paid and credit card debt growing. This becomes a constant game of playing catch up, which makes it difficult to get ahead.
2. Your Bills are Frequently Late:
Paying bills late is a sign of living paycheck to paycheck. When bills are paid late, late fees often apply, and a person’s credit rating goes down. When this occurs, interest rates on future home loans, car loans, and school loans can greatly increase. When the interest rate increases, a person’s bills become even higher, which can leave a person feeling like he or she is caught in a vicious cycle.
3. You Are Denied Credit Approval:
Being denied approval for credit can be embarrassing, but it also is a telling sign that an individual is in a position where his or her finances could use a makeover. Whether it’s a store credit card or a loan for a vehicle, low credit ratings and poor bill-paying history are significant impacts of unmanaged finances. While this can seem despairing, you can begin taking simple but steady steps of working your way out of this situation.
4. You Don’t Have a Savings Account:
While a savings account may not seem like an immediate necessity, it is an important asset. A person who does not have a savings account will find immense struggle if he or she unexpectedly becomes unemployed or if a personal emergency occurs. Working to put away even a small percentage of each paycheck is a great way to begin reversing this situation.
5. You Have Not Started Thinking about Retirement:
If you’re in your twenties or thirties, thinking about retirement can seem like something that is not an immediate concern. When people reach their forties and fifties, many individuals wish they had started saving for retirement earlier. If you are a working adult and have not started thinking about retirement yet, and there are few leftover funds to save for retirement, this could be a sign that your finances need to be reworked.
Creating a Plan:
Starting with a plan to get out of a financial hole is the best way to begin bringing about lasting change. It can start with a budget or cut back unnecessary expenses while you pay off debt. It can start with seeking help from a financial counselor or creating a strategy to pay bills on time. Every step you take can be a significant one, and each step can lead to financial stability.
Phil Shawe is the Co-CEO of TransPerfect, a global family of companies and the world’s largest privately held provider of language and business services.