By: Bryan Lee, UHEAA
Do you have an income coming in, but feel like you’re constantly broke? Do you ever think of what you’d actually do if you ran out of money? The best action plan is to learn to manage your money and develop healthy spending and saving habits—don’t let your finances get out of hand! Where do you fall on the spectrum of money management? If any of these 5 bad money management habits sound like you, it may be time for a personal finance self-evaluation!
1. Your Account Balance is Always Zero.
Do you find that you still run out money even with help from scholarships, savings, and federal financial aid like grants, work-study, and student loans? You need a little personal finance know-how in order to stretch your money further and smarter.
2. Running Short of Money for Basic Needs.
Is having enough money left over for food and clothing a struggle? Make sure to keep track of every expense and create a budget you know you can live on. If you can learn to accept what you can and can’t afford, prioritize your needs versus your wants, and try to cut out any unnecessary costs you’ll find that you have money when you need it – because you planned for it. These strategies will go a long way, especially when you’re a student.
3. Defaulting on Your Loans.
Poor money management skills can lead to missing loan payments. If you miss a loan payment, your account is considered “delinquent.” If your account is delinquent for an extended period of time, your account will end up in what is called “Default.” Defaulting on a loan can lead to serious consequences like a damaged credit score and even garnished wages. Make sure you pay close attention to the terms and conditions of any loan you borrow and keep in contact with your loan servicer or lender regularly.
Have you already defaulted on your loan? Here’s a short one-minute video that summarizes your options to get out of student loan default.
4. Receiving Debt Collection Calls.
When you don’t pay your bills, those unpaid accounts may be sent to debt collectors. These collectors use much more aggressive and frequent tactics in order to get the amount you owe (plus servicing charges and other fees).
Best advice: Answer the phone, don’t ignore bills, talk with your lender or servicer about making a repayment plan that works for you, and ultimately, pay off the bill as soon as you possibly can.
5. That Awkward Moment When Your Card is Declined.
Another sign of bad money management is when your card is declined. Here are some apps to help you track your income and expenses on a daily or weekly basis. Check out some financial literacy workshops —there are some available online.
Unfortunately, it is far too easy to waste money when you are not making efforts to manage it wisely. If you can relate to any of these 5 signs of bad money management, it’s never too late to learn and start educating yourself about finance today.