It’s sometimes easy to get caught up in a routine and the daily grind, and not pay too much attention to finances. Credit cards, for instance, might sometimes make it easy to forget the amounts spent and the amounts due. And these can quickly add up leaving some people in precarious financial situations.
“If you are concerned about running out of money, one sign to pay attention to is the accumulation of credit card debt,” said Phil Magness, senior research faculty and economist at the American Institute for Economic Research.
Indeed, he explained that purchases on credit are a bit of a double-edged sword, especially among lower-income earners.
“In the past few decades, purchases on credit have helped to make many products that were once considered luxury items available to the vast majority of Americans,” he said. “At the same time, borrowers who neglect to pay off their credit cards often risk incurring extremely high-interest payments, leading to a vicious cycle that makes it even harder to pay off this debt in the future.”
Many experts argue that there are some warning signs you might be running out of money. And being aware of these might help you take some steps to keep you out of financial trouble.
Frequent Overdraft Bank Fees
If you’re constantly getting hit with overdraft fees, that’s a clear indicator that your savings are heading in the wrong direction, said Joe Camberato, CEO, of NationalBusinessCapital.com.
“Seeing that ‘overdrawn’ notice pop up more than twice a week is like a flashing red warning light on your financial dashboard,” he said. “It’s time to step in and change your spending habits to get back on track.”
Credit Card Declines
As Camberato explained, when your credit cards start getting declined due to maxed-out balances, it can be a surprising and embarrassing moment at the checkout counter.
And it’s also more than just a momentary inconvenience, as exceeding your credit utilization limit, which is typically around 30% of your total credit limit, can lead to a decline in your credit score, he said.
“This not only makes it harder to access credit in the future, it also means you’ll end up paying more interest. So, if your cards start getting declined, it’s time to reassess your financial strategy,” he added.
You Don’t Have Or You Don’t Know Your Budget
If you don’t have a budget, you don’t know exactly how much comes in each week or month, and how much goes out.
“Many people really don’t know their financial status,” said Sean Fox, president of debt resolutions at Achieve. “Yet knowing where you stand – where you’re starting from – is the key to making changes and moving your finances forward.”
You Have No–Or a Very Small–Emergency Fund
Fox noted that many Americans overall have little in emergency savings. Citing a recent Achieve survey, he said that 51% of Americans have less than $1,000 in an emergency savings fund, including 28% who said they have no emergency savings at all.
“The best advice is to work up to a point where you could cover six to nine months of basic living expenses in the fund,” he said. “However, most people find that even a much smaller amount will help significantly when an unexpected expense comes up.”
You Are Juggling Several Credit Cards
Another sign potentially pointing to looming trouble, is if you’re juggling credit cards to pay for daily necessities or other debts.
As Fox noted, using a credit card for groceries, for instance, is not inherently bad. If you know that you can and will pay off your credit card balance in full and on time when the bill comes, and are using the credit card as a convenience item, it may be fine.
“The problem is when people don’t have the funds to pay for the groceries and end up carrying credit card debt because of essential expenditures like these,” he said.
Recurring Dips Into Your Emergency Fund
When you catch yourself saying it’s the ‘last time’ you’ll dip into your emergency fund for an expense, only to find yourself doing it again, it’s a sign that your financial balance is off-kilter, said National Business Capital’s Camberato.
“Your expenses are outweighing your income, forcing you to keep tapping into your emergency savings for everyday costs. This is the moment to take a hard look at your financial situation and start making adjustments,” he said.
Buying Things You Can’t Afford
A clear sign that someone is going to run out of money is that they begin to buy things that they truly cannot afford especially if they’re trying to keep up with the Joneses, according to Sebastian Jania, owner of Ontario Property Buyers.
“This behavior especially rings true today when we have a society shaped by influencers that present lives that they cannot truly afford,” he said.
More From GOBankingRates