The one thing that people hate the most in the morning is an alarm clock, their wake-up call. It disturbs their deep slumber and disrupts their sweet dreams. No matter how much we curse an alarm clock, there is no denying that it is responsible for waking us up on time and ensuring that we aren’t late for work each and every day. In the same way, you would be surprised to find that life gives us financial wake-up calls to shake us back to our senses.
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These financial wake-up calls make you open your eyes and help you see the web of bad financial practices that you have sleep-walked into. Ignoring these wake-up calls may spell doom for your finances in future. Here are 6 such financial wake-up calls that you (or anyone out there!) shouldn’t ignore for long:
You constantly struggle to get through the month
It is just the middle of the month and you have already run out of money. Does this sound like a story that’s way too familiar? Do you lead a lavish lifestyle for the first couple of weeks of a month and then turn into a credit-hungry pauper for the rest of the month? ‘I am broke’ is a phrase used often by a major section of the urban youth.
‘I am broke’ is a phrase used often by majority of the urban youth. There is only one simple reason for being broke in the middle of the month – ‘You are living a lifestyle you can’t afford’. When what you spend is way more than what you earn, money struggles are bound to happen. If you are leading a life that makes you say, ‘I am broke all the time’, then maybe it is a wake-up call for you to change your lifestyle.
To ease your monthly money crisis, automate all bills to be paid at the start of the month so that you don’t have enough money to spend at bars, restaurants and shopping malls. Control your urge to buy fancy things that you don’t require. Weekends are the time when most of us go crazy with our expenses and shell out a bomb to have a good time. Instead of splurging money and whining that you are broke, pick up a book or log into your Netflix account and chill out with a tub of homemade popcorn.
Weekends are the time when most of us go crazy with our expenses and shell out a bomb to have a good time. Instead of splurging money and whining that you are broke, pick up a book or log into your Netflix account and chill out with a tub of homemade popcorn.
You use your Credit Card more than your Debit Card
Your Credit Card may be your plastic soulmate, bailing you out of money troubles from time to time. But if you start abusing your Credit Card, the relationship with your plastic soulmate is bound to get sour.
Credit Cards are meant to be used for one-off expenses that you can pay back quickly over the next few months. But if you start swiping your Credit Card for all your needs and luxuries, your Credit Card bill will be humungous and can quickly snowball into a huge pile of debt, thanks to the high interest rate on your Credit Card.
If you love your Credit Card way more than your Debit Card, then it is a sign for you to change your money habits for good. Resist those shopping impulses and save your relationship with your Credit Card. If you want to buy something expensive, create a fund for it and save money to buy it instead of swiping your Credit Card. And use your Debit Card to pay for groceries, food and other utility bills. If being low on cash is the reason behind Credit Card abuse, then change your spending pattern and save money for important expenses throughout the month.
If being low on cash is the reason behind Credit Card abuse, then change your spending pattern and save money for important expenses throughout the month.
Additional Reading: How To Be A Disciplined Credit Card User
You continuously fail to put money in your Savings Account
By now, everyone knows the importance of saving money for future milestones or rainy days. But still, an alarmingly large percentage of the urban youth has no savings plan in place for their future. A vast section of our population fails to put aside money in a Savings Account, let alone invest in a savings scheme.
If you make plans to put a predetermined amount of money in your Savings Account but have failed to do so in last 2-3 months or so, then it is a wake-up call for you to get your act right. If you always find yourself short of money to put into your Savings Account, then you have got your priorities wrong. It means that you are spending a lot on things that are less important than building your savings. Instead of splurging, indulge in cost-cutting and always keep some money aside for your Savings Account.
Alternatively, you could start the month by setting some money aside for savings and do not withdraw it no matter how desperate the money crisis is.
Additional Reading: Alternatives To Savings Account
You are 30 and have not set up a retirement plan
It is understandable if a person in his/her early 20s doesn’t think about retirement. But if you are well into your 30s and are still living in the moment without planning for your retirement, then it is a major financial wake-up call.
Creating funds for a comfortable life post-retirement is essential for every individual. But there are people who are so caught up in the present day cycle of earning and spending that they are oblivious about retirement savings. If you don’t wish to work all your life, then it is high time you invest in retirement plans.
We know it is hard to plan your retirement and take care of your daily expenses with what you earn, but you need to find ways to invest in your retirement before it is too late. Start by making small monthly contributions towards your retirement fund and you can raise your contributions once you get a salary hike or a new source of income.
You are carrying a mountain of debt
It is completely okay to take loans during financial emergencies or for buying an asset. But what’s not okay is when the debt keeps on growing because you are not taking efforts to clear it. If you have been carrying a mountain of debt for years and there is no sign of a decrease in debt, then it is a financial wake-up call that shouldn’t be ignored.
From defaulting loan EMIs and Credit Card bill payments to taking more credit when you are already in debt, there are many ways to swell your debt. But there is only one way you can clear those debts – creating a debt repayment plan and sticking to it. Keep your savings plan on hold and start clearing your debt as soon as possible as it will grow every month due to the high-interest rates. Save money in your day-to-day life and use that money to repay your debts.
Additional Reading: Savings Or Paying That Debt Off: What Makes More Sense?
You have no clue where all your money is going
You are earning a decent amount of money that is more than enough to pay for your basic utilities, expenses and to create a savings fund for your future. But once you start spending, you have no clue where all your money has gone. This is the story of almost every other individual out there. If you feel you have no control over your money and that you have no idea about what it is being spent on, then it should ring a financial wake-up call in your mind.
A person should always have control over his/her money. And the best way to gain control over money is by tracking all sources of income and expenses. Create a budget by noting down each and every rupee that you spend. This allows you to see where your money is going and helps you identify the unnecessary expenditure. Once you get a clear picture of your monthly expenditure, you’ll have control over your money and you’ll be able to save it too by cutting out unnecessary expenses.
Now that you know how to identify a financial wake-up call, it is high time that you stop ignoring them. Gain control over your money and lead a financially hassle-free life. Got it?
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