By Nell Casey GOBankingRates.com
WWR Article Summary (tl;dr) To get control of your spending habits, finance experts suggest a money management app like Mint to stay on top of your transactions and bank balances. Your spending is updated in real time, and you can instantly see how much money you have available with a quick glance at your phone.
Americans have a money management problem.
"Last year, 25 percent of Americans missed a credit card payment and paid more than $77 billion in penalties, ouch!" said Kimmie Greene, consumer finance expert for Mint. "That's money that could otherwise have been used to pay off debts, save for the future or go on a dream vacation."
Even if you're not currently in credit card debt, you might be guilty of fiscal faux pas that could affect your finances for the long haul. Here are eight signs that you might have a money problem.
YOU WORRY YOUR CARD WILL BE DECLINED If you've ever stood in line at the supermarket mentally subtracting the cost of the items in your cart from your bank balance, then you might just need a little help with your money. Worrying about being able to pay for essentials could indicate that you don't have control over your finances.
"So, as people are looking for ways to take the work (and worry) out of staying on top of their money, paying bills on time is an important first step," said Greene. "Doing so makes it a lot easier to stick to a budget and save for the future."
Use a money management app like Mint to stay on top of your transactions and bank balances. Your spending is updated in real time, and you can instantly see how much money you have available with a quick glance at your phone.
YOUR CARD IS DECLINED REGULARLY FOR PURCHASES If you're routinely swiping your debit or credit card and getting declined, this could be a sign of more serious issues with your money management. Whether you're spending on things you can't afford or just struggling to stay within your budget and your bank balance, a professional will be able to help you find ways to tackle your financial issues more effectively.
YOUR BANK BALANCE IS LESS THAN $100 If you have sufficient funds left in your bank account just days before payday, congratulations. But if you're regularly finishing up the month with $100 or less in your account, that could be a sign that you need help managing your finances.
If so, you're in good company. According to a 2016 survey by the National Endowment for Financial Education, nearly half of Americans are living paycheck to paycheck. If this is you, it's essential that you put aside some of your cash as soon as it hits your account. Depositing money into an emergency fund to save for unexpected expenses is a good place to start. And yes, you can save money even if you're living paycheck to paycheck.
YOU'RE NOT SAVING FOR THE FUTURE It's great that you're dutifully saving for your next holiday or a new car. However, it's also important that you save for those longer-term goals, like your retirement.
According to GOBankingRates' 2017 Retirement Savings survey, more than 50 percent of Americans are on track to retire broke. Further, 55 percent of U.S. adults have less than $10,000 saved for their golden years.
The fact is, the earlier you start saving for your retirement, the better your financial position will be when the time comes. A financial planner can help you create a plan to reach your retirement savings goals.
YOU ONLY SAVE WHAT'S LEFT AT MONTH'S END You're putting money into an investment or retirement account. But how much you set aside depends on what you've got left in the bank at the end of the month. Sometimes it's $200, and sometimes it's $20.
Saving for your future should be a top priority when you get your paycheck, along with paying rent and other necessary expenses. Some experts recommend saving about 13 percent of your gross income. If that seems unattainable, start with 5 percent and work your way up.
YOU TAP SAVINGS FOR DAILY EXPENSES Even if you're dutifully saving money each month, regularly drawing on those funds to pay for daily expenses will slow down your savings growth. It could even cause you to slip backward.
"Oftentimes, as people set up budgets, they do so with an ideal world scenario in mind, one that often requires more restraint than is realistic," Greene said. "So, people should consider tracking expenses for one to three months at the start to see where their money is going. And with that information, establish a budget that is highly personalized, including some unspeakables, such as avocado toast, fresh-pressed juice or a tried-and-true latte habit."
Additionally, you should analyze why you need to access your savings for non-emergencies. Are you trying to save too much, leaving you short in other areas of your budget? In that case, reduce how much you save and commit to not accessing those funds. Are you regularly receiving big bills for which you haven't budgeted, such as annual auto insurance? Budgeting tools can help you figure out how to avoid getting surprised by less frequent bills.
YOU CARRY A CREDIT CARD BALANCE Carrying a lot of credit card debt is a sure sign that you need help managing your money. According to a 2016 survey by GOBankingRates, the median amount owed by individuals with credit card debt was $2,000. However, the amount of debt rises with income levels. In fact, the median balance carried by those in the $100,000 to $149,999 income bracket was $6,944.
If credit card debt is a serious issue for you, seek help from a financial counselor to figure out the best way to pay it off. Perhaps an advisor can help you negotiate with your creditors to reduce your interest rate.
YOU HAVEN'T THOUGHT ABOUT YOUR RETIREMENT Even if it seems far off, your retirement will come around eventually, and it's important to be prepared. First, consider the type of retirement you'd like to have and then figure out how much money you'll need to make it happen. A retirement calculator can give you a rough idea of how long your retirement savings will last. And a financial planner can help you create a plan to make your dream retirement a reality.