Most of us don’t realize we’re headed for trouble until it’s already on our doorstep. This rings true with our finances, too. It’s not until we realize we’re late for a payment (again) or we’ve overdrawn our account that we see that things have gone too far. However, there are some warning signs that we are pushing our money to its limits. Here are 7 Financial Warning Signs You Shouldn’t Ignore and what to do when you recognize you’ve got a problem.

You Don’t Have a Central Location to Store Your Bills

Life is busy! And sometimes we lose track of things. While you don’t have to have a complicated organizational system, you do need a centralized location to keep physical bills when they arrive in the mail. Especially since the majority of bills are delivered digitally, this can be challenging and something can be easily overlooked.

What to Do: Again, you don’t need some complex binder or a filing system. You just need a folder or even in a spot in your home where bills go when they arrive. Personally, I’d avoid using a drawer because once things are out of sight, they’re usually out of mind, too. Even if it’s just a spot on the counter where only bills go, that’s fine. Use a basket. Just be sure they’re in a location that will be “in your way” so you remember to pay them.

You Don’t Know How to Log Into All Your Accounts

Bank accounts, retirement accounts, college savings, credit card, household expenses – almost every area of your finances has gone digital. You need to be sure you know how to log into each. I get that it may feel a little overwhelming at first, but you can do this and your overall financial health will improve once you regularly log in just to see what’s going on with your money.

What to Do: Begin by listing out all of the accounts you have on a physical paper. Then head to each website to attempt to log in. Use an app or a web browser function to save the password on your device if it’s not shared with other individuals. If it is, you may want to consider keeping a paper document you can store in a secure location with all of the websites and passwords for your accounts.

You Don’t Know How Much Money Is In the Bank

Sometimes the word budget can be intimidating. But I always tell people that budgeting is simply “money in, money out.” In order to know how much you can spend, you need to know how much money you have. While I don’t expect you to spit out your financials like a robot, you need to have a good idea approximately how much money you have at any given moment.

What to Do: This is where knowing how to log into your financial institution really comes in handy. If you can, put an app on your phone and know how to log in so you can check your balance wherever you are.

You Have No Idea What You’re Spending Each Month

I’m including this one because I think we may all fall into this warning sign a little right now – myself included. Prices have fluctuated so much in the last twelve months (even the last eight months). It’s difficult to know what your expenses are going to be at the grocery store, the gas pump, or even on regular household bills.

What to Do: After you’ve been checking your finances on the regular, you’ll want to begin doing a little budgeting so you can project how the money you have will be spent in the month(s) ahead. After all, budgeting is simply money in and money out. Begin by collecting your receipts for 30 days and then use that information to shape a plan. Whether you use a budgeting app, a notebook, or an online tool, allow those numbers to shape anywhere from 30 to 365 days worth of your spending.

You Couldn’t Cover a Basic Emergency

It’s never a question of if something unexpected will happen, but when. Into every life, a little rain will fall. A car will break down, your kid will need braces, you’ll break your arm, or your washing machine will quit washing. If you can’t cover basic emergencies, your finances can easily get off track and take years to recover.

What to Do: Begin saving as quickly as you can to create an emergency fund. I usually suggest between $1000-$2000 because that’s what most minor emergencies cost. If you’ve eliminated your debt, you may want to consider building one for more catastrophic emergencies like hospitalization or job loss that totals more like 3-6 months of living expenses. But begin with this smaller fund first so that you have a safety net and some peace of mind. Don’t know where to begin, check out this post for some ideas.

You Don’t Know How Much You Owe

Debt can be scary. For years, we kept our heads in the sand when it came to how much we owed. We kept paying minimums without knowing the total amount. If you want to eliminate debt, then you should have a good picture of how much you owe.

What to Do: Begin by rounding up all of your debt. We chose to use the debt snowball method after failing with a few methods of our own. The idea behind this principle is that you rank your debts from smallest to largest, regardless of interest rate, and begin paying off the smallest first. Then once that debt is paid off, you tackle the next one up the line, using the amount you were paying on the first debt in your “snowball.” Things continue to avalanche until you’ve reached your final debt. An advantage to this strategy is that you’re using money you weren’t ever living on to put toward each successive debt.

You Don’t Have Any Goals for Your Money

If you don’t have a roadmap, you’ll remain lost. Having some short term and long term goals will give you a reason to trim your budget and check in on a regular basis. This looks different for everyone, depending on the age and stage of life. However, there are some basic goals we all should keep in mind. Without goals, we’ll keep doing what we’re doing and then be surprised when we don’t have anything to show for it.

What to Do: If you share finances with someone, this is a task to complete together. And be warned, you’ll have different goals because you’re different humans. Short term goals might include things like small purchases, Christmas, vacation, etc. And longer term goals include things like debt elimination, vehicle purchases, saving for a down payment on a home, retirement, college savings, and home remodeling. It’s a good idea to have a mix of goals agreed upon by both parties or settled on individually.

Warning signs aren’t condemnations. Your money story isn’t over yet. In fact, it’s just beginning. And you may have these warning signs on and off throughout your life. Financial health is all about how you respond when you bump into one of these warnings and how you course correct.
Check out Cherie Lowe, the Queen of Free for the best money saving and debt slaying tips!

My book is now available: Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After. You can also check out The Debt Free Devotional on Kindle.  

This post contains an affiliate link. That means when you get a great deal, learn about a way to save, or maybe even something for free, I may end up making a small commission. All prices are subject to change.

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