Personal Financial Warning Signs

Many people are living paycheque to paycheque these days. The reasons for this are various and complex, but it is causing many to drift inexorably toward genuine financial crisis.

A major personal financial catastrophe can be avoided if the warning signs are noticed early enough. But you must know them and be willing to look honestly enough at your situation to enact real changes.

It may be time for you to seriously reevaluate your personal budget if any or all of the following warning signs are present:

  1. A large amount of your monthly debt servicing is toward minimum payments only
  2. You have at least one credit card that is maxed out
  3. Bills come up for payment as a surprise
  4. You are regularly in overdraft with your bank account
  5. 20-25% or more of your monthly income goes toward unsecured debt servicing
  6. You find yourself choosing which bills to delay
  7. You pay for items which should be cash-flow items using credit cards (i.e., groceries)
  8. You have no savings or emergency fund
  9. The week leading up to your paycheque is always money-stressed
  10. You have used a payday loan at least once
  11. You are unsure of your total outstanding unsecured debt
  12. You argue over money with your spouse/partner

If any of the above warning signs are present in your personal finances, you need to make some changes.

Make lists. Lists are good. Information laid out on paper is good. It doesn’t have to be a spreadsheet or any kind of fancy format. But start writing down information.

Take a 30-day view. For the last month, look at your bank account & all credit card statement(s). Add up what you spend your money on (categories) and see if there are any timing patterns. Which parts of the month are the worst? Are you spending too frivolously right after a windfall (paycheque), leaving you short leading up to the next one?

Once you have the numbers, categories and timings down, you can start to enact change. “If you can measure it, you can manage it.” 

When you have the information detailed,  speak to a financial professional. Usually a consultation is free (it always is with a Licensed Insolvency Trustee), even if you don’t end up using their services. A 3rd party look at things is often a real eye-opener, as it is often too tough to really see what is happening when you are too close to it.

There are often more options available than you think. If you really sit down and organize your numbers, showing these to a debt professional or a CPA (Chartered Professional Accountant) will give them good information with which to advise you.

But tackle the problem soon if you are experiencing any of these warning signs. Money problems are the opposite of wine – they don’t improve with age. Time is only on your side if you make a plan and stick to it.