5 Key Signs Your Finances Are in Trouble

5 Key Signs Your Finances Are in Trouble

Crystal Mayer   Tue, August 8, 2023

If you feel like there is never enough money in your bank account, you are not alone. According to a survey conducted by the LendingClub Corporation and PYMNTS.com, 64% of adults in America reported living paycheck to paycheck in March 2022. Millions of people are unable to get ahead or put money aside for savings, meaning that they may be struggling financially.

When you are in the middle of it, however, it can be challenging to determine just how dire your financial situation is. You may have become numb to the fact that you routinely pay bills late or are swimming in overdraft fees. Many people simply have no other choice, given that wages have not kept pace with the high cost of living in most areas. But recognizing that your bank account is not healthy is half the battle, so here are five key signs your finances are in trouble.

You Are Late or Miss Your Monthly Payments

One of the most telling signs that you may be spending more than you make is if you regularly miss payments or even if you have to pay them past the due date. If you cannot make payments on time, your credit score will be negatively impacted.

As your credit score drops, you will get less favorable lending terms making it more expensive for you to buy a car or home. In some cases, you may not qualify at all. If you find yourself missing due dates, you need to evaluate your spending habits. Start by writing down all of your income and expenses. See if there are ways that you can cut back to ensure that you pay your monthly bills on time. Set the bills on automatic payments to ensure they are made in a timely manner.

You Live Paycheck to Paycheck

If you are one of the 166 million that live paycheck to paycheck, you may be in more financial trouble than you realize. Living paycheck to paycheck is not only stressful, it is not sustainable. One emergency, such as a car wreck or job loss, could spell financial ruin.

To get out of the habit, determine if you are living paycheck to paycheck because you spend beyond your means or if it is that you truly cannot afford even a modest lifestyle. If you spend a lot of money on nonessentials, then you should be able to cut back and put money into savings. If your paycheck strictly goes toward the basics, you might need to consider relocating to a less expensive area or taking on a side hustle.

You Don’t Have an Emergency Fund

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