17 Warning Signs That Showcase You’re Clueless About Finances—Are You Ignoring These?

It is essential to have your finances managed well. However, even if you manage your money well, there may be signs that you need to be more knowledgeable about your finances, which may cause financial difficulties later on. Ignoring signs of being financially clueless may lead to preventable problems in the future. Some warning signs that shouldn’t be ignored and that showcase someone is clueless about their finances include:

You Wait for Your Salary

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One clear warning sign of being financially clueless is waiting for your salary to come in every month or after every few weeks. This happens because you are running short on the money a few weeks after you get your pay. This is a clear indication that you are not managing your money well. A few days before payday, you only have enough to cover food and transportation costs, while the day after your payday, you are spending money on expensive things that are not necessities and, therefore, unable to save.

You are Putting off Planning for Retirement

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Due to different kinds of costs that need your attention or loans that you have to pay off, you may be putting off saving for retirement. It is widespread for people to want to clear off loans or debts first before thinking about a retirement plan. However, this is a lousy way to manage your finances and indicates you need to be financially more knowledgeable. Retirement cannot be financed through loans, and the longer you wait to start saving for your retirement, the less time you’ll have to save enough money to ensure a comfortable retirement.

Using a Regular Savings Account

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Regular savings accounts seldom offer benefits to people who use them. The interest rates are meager, and people don’t usually use the account to save money.

Sometimes, these accounts also have higher banking charges, which could lead to you losing more money than if you stored your money in different kinds of accounts. If you are more financially aware, you will be well versed with the kinds of accounts available across financial institutions and which accounts can benefit customers.

Spending too much on Housing

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With inflation rising, the cost of housing is also rising. More and more people are staying in places considered way above their means. The more money is spent on housing. The less money is available to save or use on other everyday necessities. Generally, experts suggest that at most 30% of your income should be spent on housing costs, especially renting costs. However, this may be challenging as renting costs continue to rise. There may be various solutions to help with housing costs. This could be moving to a less expensive area, taking on a roommate, etc.

You Don’t Know Your Credit Score

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Your credit score helps determine if you qualify for a loan or lines of credit, essential when buying a car or applying for a mortgage. A clear indication that you need to be more knowledgeable about your finances is if you are unaware of your credit score and how to calculate it. Many factors affect your credit score: Late payments, running up balances, and applying for multiple credit cards in short periods negatively affect your credit score.

Often Paying Late Fees

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If you need to improve at managing your finances, a tell-tale sign would be constantly being slapped with late fees for different kinds of bill payments like rent, utilities, etc. In addition to extra fees for late payments, another sign of bad financial management is an overdraft of your bank account. Financial experts suggest that to ensure you properly manage your finances, you can begin by clearing all your bills before they are due.

Not Knowing How Much You Spend

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A significant indication of financial cluelessness is not being able to track how much money you spend. If not managed well, this can lead to overdrafts, overspending, and debt. One way to keep track of spending is by noting down all your income and expenses on a digital device or pen and paper. Keeping track of spending is crucial to sustaining a good lifestyle.

You have Credit Card Debt

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If you want to be able to manage your finances properly, you must be able to clear all kinds of credit card bills and payments on time.

Carrying around credit card debt can negatively impact your financial situation altogether. These kinds of debts usually include high-interest rates, which affect your ability to build wealth or assets. It would help if you made sure that paying your credit card bills is a priority to avoid any such situations rising or accumulating to amounts you may not be able to pay.

You Often Make Excuses about your Finances

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This is a sign that many people may not notice because you keep insisting that you are managing your finances well when, in reality, you cannot save up or put money into your emergency fund. You may find excuses or explanations that defend why your finances are set back, or you cannot meet your financial goals. Staying true to yourself will help you realize where the problems may lie and allow you to tackle them to help improve your overall finances.

You Look for a Quick Fix

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A sign to look out for if you don’t know that you are financially clueless is if you continually look for a quick fix to solve your financial problems.

Taking shortcuts with money can be a clear indication of bad financial management. This can include consistently transferring your credit card balances or any other quick fix. It may be challenging to eliminate this habit, especially if you are struggling financially. Therefore, it is better to take tiny steps, look for longer-term solutions, and focus on the fundamentals of financial management.

You don’t have an Emergency Fund

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An emergency fund is one of the most essential steps of proper financial management. If you cannot set aside some money to keep as an emergency fund for a rainy day, your finances may not be where they are supposed to be. Most financial experts suggest that at least three months’ expenses should be saved as an emergency fund.

If you are beginning to save towards this fund, it may take some time to accumulate the amount; however, any step towards saving is a good step for your finances.

You Make Minimum Monthly Credit Card Payments

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Making your credit card payments on time may not be enough to keep you off debt. If you are only making minimum payments every month, you are not properly managing your finances. Minimum payments towards credit card bills can rack up costs, leaving you with a fortune’s worth of debt.

It is always better to make appropriate credit card payments and avoid any accumulation of interest rates or debts in the future.

You Avoid Thinking about Money

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We often avoid thinking about things we are ashamed of or things that can stress us out. Not giving enough thought to your finances means that you are not keeping track of your expenses and not managing your money. If thinking about your financial situation causes you stress, it indicates that you need to sort out your finances. It is essential to know your finances, where you’re spending money, how much you save, etc. This is one step towards proper financial management.

You’re Terrified of Investing

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Investing can do wonders for your financial situation. If you are unaware of investing or not too scared to invest, you miss seeing potential financial growth. If you want to take care of your finances for your future, investing may be the best way to do so. You can have a conservative approach towards investing and start small if unsure of the outcomes.

You Hide the Truth about Your Finances

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If you feel ashamed to talk about your financial situation to your close ones, it may indicate that you have bad financial management and are financially clueless. Nothing is wrong with being able or not being able to afford luxury items or even expensive meals. It would help if you stayed true to where you are financially, and you will be able to avoid overspending. Sharing your financial worries with the people close to you could help you get insight on how to manage your finances properly.

Frequently Asking for Help with your Expenses

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If you cannot pay for your daily expenses or necessities, you need to find ways to manage your finances better. Frequently asking for help from your parents, family, or friends to pay for your expenses clearly indicates financial mismanagement. It is important to find ways to meet your expenses, except in case of unforeseen circumstances.

However, if an emergency fund had been set up, asking for financial help from others may not have been a requirement.

You are Surprised by the Costs of your Monthly Bills

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If you have poor financial management, you are also likely unable to save or keep track of your expenditures. Receiving monthly bills that must be paid by a specific time can surprise you more often than not because you have not prepared yourself for the bills you will have to pay. If you want to become more financially responsible, you must find ways to save money specifically meant to pay off all your bills on time, without the risk of not having enough money to meet payments.

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