Financial health is as important to a person as is physical or mental health. In fact, they are all co-related. A happy person is the one who has managed to create an optimum balance between these three factors. A small disequilibrium in these parameters could lead to chronic problems. So, better late than never. It is very important to understand the significance of proper financial management. Any person, business, or country can get into a financial trouble. As we all know that there is no fire without a smoke. So, when we smell the smoke we should prepare ourselves for the impending financial crisis. At the outset, signs indicating troubled personal finance may be too subtle to identify.
It is a common knowledge that to have good financial health one should avoid debts, earn more than required, and spend less than the income. Sometimes, it is difficult to maintain straight financial equations due to unforeseen expenditures. A person should be prepared to tackle any sort of financial crisis without putting himself into a precarious situation. Financial prudence should be exercised to avoid financial mishaps. In Australia, there are financial agencies which assist you in becoming financially savvy.
There are a few indicators which most of us seem to overlook in our daily lives. These are the signs indicating trouble in personal finance. Some of these have been listed below.
Absence of a budget: Having a budget should be considered as mandatory by everyone. A family, business, or an institution which runs without a budget is sure to falter. It is like driving through an unknown place without a proper road map.
Lack of a Plan: It is important to have a plan about your goals. Well-defined goals with a solid plan can never let you down. They will ensure financial and personal success. If there is no plan, then trouble is inevitable.
Use of saving for debt consolidation: Savings are an integral part of any financial plan. They should be rarely used for consolidation of debts. Debts should be taken care of by creating additional income. If a person regularly uses his personal savings to clear his loans, then it surely is one of the signs of troubled personal finance.
Minimum payment on the credit cards: Credit cards give the facility of paying the minimum on any purchase. This tempts the buyer and he goes out for it. This may look very lucrative in the beginning but it acts like a sweet poison on your financial well-being. This should be avoided at any cost.
Taking one loan to clear another: This is perhaps one of the most dangerous indicators of your financial crisis. It means and spells only crisis. A person should seek financial advice at the earliest if this has become a routine.
Availing short-term loans: People opt for short-term loans under desperate situations. These loans are very expensive and can lead you into further financial crisis.
You should always have a checklist ready to identify the problems in your finance. Identification of the signs of trouble in personal finance is not enough. Appropriate measures should be adopted to avoid them.