Did you get the Alert?
Recent cellular ALERT testing warning Canadians of an immediate emergency made me think about how important alerts really are when time to prepare is critical. The more warning we have, the more likely we will minimize the impact of a pending disaster. Alerts are equally valuable for our finances; however an immediate alert may be too late. A warning signal that you have insufficient funds will only be helpful if you have emergency savings. This makes it incredibly important to recognize signs that may indicate money troubles are looming. At Credit Counselling Services, we help people recognize steps they can take to improve their finances, and support them in finding solutions that will stabilize and recover their financial well-being. While people’s circumstances vary greatly, some of the following ALERTS may be early warning signs that we need to revisit our budgets, strategize and get professional help if needed.
1. No Emergency Funds: Yes, the most important sign of pending trouble is lack of emergency funds. Life happens and without savings, we are forced to use any credit available to us. “Windfalls” are great for a jump start on emergency funds, but savings should build on a regular basis.
2. Not Replenishing Emergency Funds: It makes sense… if we use money intended for emergencies and don’t replace them in a timely manner, we have to question why not? What’s changed and why can’t we afford to save what we have been able to save in the past?
3. Not wanting to open bills or view e-statements: When finances are healthy, we want to make sure the bills are correct and we are not overcharged. We have a plan to pay things and bills are not something to avoid. Not wanting to deal with them may indicate a serious problem.
4. Arguing or avoiding money conversations: When talking about finances leads to unpleasant discussions, blame or other emotional feelings such as shame, guilt or despair, it’s a sure sign that income and expenses need to be reviewed.
5. Using credit for basic needs: if we are forced to use credit for basic monthly costs such as rent, food, gas, hydro, and make minimum payments in the months to follow, we are living beyond our means. Paying interest charges on unsecured credit in general may be considered a warning sign for many.
6. Social isolation: Finding ourselves turning down invitations to join friends or family because we cannot afford to participate or contribute in the way we would like, may be a serious alert if reoccurring over a prolonged period.
7. Making partial payments: Paying an extra high bill in part occasionally may not be an alert, but if this is happening on a regular basis and we are adding late fees monthly or ‘robbing Peter to pay Paul’ routinely, this is a red flag, not to be ignored.
8. Feeling you never get ahead: A sustaining feeling of woe over our finances cannot continue indefinitely. We humans need hopes and dreams. Goals should be part of our finances.
9. Physical Symptoms: That’s right! Financial stress, like any prolonged negative stress, can cause physical symptoms resulting from constant worry. Common reports of sleeplessness, difficulty concentrating, stomach problems and headaches are often associated with financial problems.
10. Any changes to income or expenses should be a routine ALERT: Reduced overtime, a child turning 18, changes to household income, rising gas prices, etc., are all good reasons to sit down and re-examine your cash flow. Finances are a balancing act, and anything that tips the scales needs correction.
Note that signs need to be considered in context to our current situation. For example; if we are saving for a vacation, turning down social invitations may not be an alert, simply a sign of dedication to our goal. And if we are unable to save for an emergency fund, and know it’s because of reduced hours at work, or illness; give ourselves a break. Finances are constantly changing because the economy changes. Prices and job markets go up and down and it’s important to remember that we do not have control of everything that impacts our finances. Because of changes that are often out of our control, it is really key to determine our own personal red flags, and adjust our spending accordingly.
As we learned in recent testing, ALERTS don’t always work. Recognize that finances are different for everyone. We each have our own threshold for financial risk, security, and sense of well-being, so our personal alerts may differ. A common and loud ALERT for ALL of us should be not feeling in control of our finances. An overwhelming sense that we are living and working just to pay bills is a real warning not to be ignored. Like any pending emergency, we can reach out for help to avoid unnecessary financial hardships.