Now that most of the pandemic’s restrictions have lifted, many of the things standing in your way of spending have all but disappeared. With the return of happy hours, concerts, and flights to sunny resorts, your desire to make up for lost time can push your wallet to its limits.
Sadly, your budget may be out of financial shape. After so long staying home and being safe, you aren’t used to budgeting your money like you used to before the pandemic. It’s been such a long time since you felt like you could go out that you may not even be aware of just how much you’re spending.
You can spot overspending a mile away if you know where to look. Here are three warning signs you may be overdoing it.
Warning Sign #1: You’re Maxing Out Credit Cards
Credit cards have a dangerous side. While they can help you bridge the gap between paychecks, they can also trick you into thinking you have more money to spend than you actually do.
Depending on your credit card limit, you may have thousands of dollars available to spend. If you’ve maxed them out without any plan to repay them, you’ll be carrying over a balance, which is subject to interest and finance charges.
In other words, all your spending will cost even more if you can’t pay off your credit cards by the due date.
Warning Sign #2: You Aren’t Saving
One of the biggest warning signs you’re not keeping to a balanced budget is if you aren’t setting any money aside in an emergency fund.
You need savings to help you whenever you need to make a big purchase that exceeds what you can afford with one paycheck. You can set aside money towards these expenses — whether you want to renovate your bathroom for fun or handle an emergency leak in the shower.
Without these savings, planned purchases are all but impossible. You’re also vulnerable to any unexpected expense that you can’t ignore, like a plumbing disaster.
Warning Sign #3: You Need to Take Out Loans Online
Without savings, you don’t have a lot of options in an emergency. You might have to take out loans online to make sure you get your shower repaired before it causes structural damage to your home.
Not sure what kind of online loan works best for your emergency? Financial institution MoneyKey compares cash advances, installment loans, and line of credit personal loans to equip you with the info you need before you borrow.
A little time spent researching can help you decide what online loan can help. However, the lending experts at MoneyKey recommend using online loans in emergencies. If your spending habits make it so that you have to borrow an installment loan regularly, this is another warning sign you’re spending beyond your means.
Warning Sign #4: Your Credit Score Falls
Another warning sign you may be overdoing it is credit damage. This could occur any time you pay a bill late or carry over a balance on your credit card. That’s because payment history and credit utilization ratio are the top two factors (of five total) that impact your credit score. Your score may drop as you miss payments and max out cards.
A lower credit score can get in the way of borrowing money in the future. You may have to pay more for online installment loans for bad credit, or — in the worst-case scenario — a lender may even reject you.
Use a Budget to Control Your Spending
Do any of these warning signs sound familiar? Take some time to make a practical budget that balances saving and paying off online loans with fun spending. This way, you’ll appreciate your newfound freedom responsibly.