We’ve all had those moments. You check your bank account, see the balance, and think, “Yikes.” Maybe your credit card bill made you break out in a cold sweat. Or you’ve got five different ‘Buy Now, Pay Later’ plans but can’t quite remember when any of them are due. (No judgment, those payment notifications have a sneaky way of showing up after payday…)
If any of this sounds familiar, you’re not alone, and you’re definitely not doomed. Most financial issues don’t appear overnight, and, honestly, they’re probably not gone overnight, but there is always a way out. These issues tend to sneak in, bit by bit, until suddenly you’re wondering how your DoorDash bill rivaled your car payment last month…
But here’s the good news: recognizing financial red flags is the first step toward turning things around. Knowing and acknowledging that you may need help is the first step toward taking control of your finances again, and that’s exactly what we’re here to help you do. In this blog, we’ll walk you through 6 common financial warning signs, explain why they matter, and, most importantly, give you some tips on how to fix them.
Let’s go over six of the biggest red flags you’ll want to look out for, and how to wave them goodbye for good!
1. You Have Multiple BNPL Plans and Have No Clue When They’re Due
Ah, Buy Now, Pay Later (BNPL) plans. Ever caught yourself saying “But it’s only four easy payments”? Yes, they might be helpful, but if you’ve got more BNPL due dates than calendar space to track them, it might be time to pump the brakes.
BNPL services can be helpful in a pinch, but having too many of them can become an unintentional debt trap, especially when you lose track of payment dates or stack them across different platforms – a big financial red flag.
Here’s a tip on how to fix this:
Start by listing all your BNPL plans, payment amounts, and due dates in one place (a note on your phone works, or a spreadsheet if you’re feeling fancy). Set calendar reminders a few days before each payment is due. Then, consider pausing new BNPL purchases until the current ones are paid off. If these plans are straining your cash flow, try consolidating them or paying them off early if possible. This is your chance to take control before BNPL becomes Broke Now, Panic Later.
2. You’re Living Paycheck to Paycheck, Even With a Decent Income
If your income is solid, but your bank account still feels like a revolving door, that’s probably a financial red flag. Living paycheck to paycheck can happen at any income level, and often, it’s not about how much you make, it’s about how you manage it.
Here’s a tip on how to fix this:
Start by tracking your expenses for a full month. Use a budgeting app, spreadsheet, or even old-school pen and paper. You’ll likely find some sneaky spending patterns (yes, we’re looking at you, $7 lattes and “late-night retail therapy”). Then, build a budget that aligns with your values and goals. Prioritize necessities, automate savings, and make room for the fun stuff within reason. Then, the most important thing is to stick with that budget.
Want to know more about budgeting and how to start creating one for yourself? In collaboration with SmartSpending, we’ve written this blog on Budgeting 101. Check it out for more information on the topic of budgeting.
3. Your Emergency Fund Is Based on Hope
If your emergency fund consists of crossing your fingers and hoping nothing bad happens, it’s time to fix that. Emergencies don’t wait for you to be ready. Whether it’s a flat tire, an unexpected medical bill, or your air conditioner breaking down during a heatwave, having cash on hand for emergencies is key if you don’t want to go into debt in any of those situations.
Here’s a tip on how to fix this:
Start small. Your first goal? Save $500. Then build toward 1 to 3 months of essential expenses. Keep it in a separate high-yield savings account to avoid the temptation of dipping into it for non-emergencies. Automate transfers right after payday, even if it’s just $25 a month – it adds up fast and builds peace of mind!
And, if you’re not convinced yet, in this free financial education resource you can read about 6 more reasons as to why you need an emergency fund.
4. You Have No Idea Where Your Money Goes
You get paid. You spend. You blink. Your account is empty. If you ever find yourself wondering, “How did I spend all that already?”, this one’s for you. Not knowing where you’re money went during the month is a big financial red flag. Money is there to work for you, not there to give you problems and stress.
Here’s a tip on how to fix this:
The thing you probably need is clarity. For the next 30 days, track every dollar that comes in and goes out. Apps like Credit Karma, YNAB, or even your bank’s built-in expense tracker can help. Once you know where your money is going, you can spot leaks, whether it’s too many subscriptions, frequent takeout, or random Amazon buys, and start plugging them in. Awareness is power. Once you see it, you can fix it!
5. You’re Carrying Credit Card Debt With No Repayment Plan
Credit cards aren’t evil, but they can be expensive if you’re carrying a balance month to month. With interest rates averaging over 20%, consistently carrying credit card debt is one of the most costly financial red flags out there.
Here’s a tip on how to fix this:
Start by listing your cards, interest rates, and balances. Then, choose a repayment strategy: the debt avalanche method (paying off the highest interest card first) or the debt snowball method (paying off the smallest balance first for a quick win) are two of the most powerful ones. Then, set up automatic payments, consider balance transfer offers (with caution), and avoid adding new charges while you pay things down.
And remember, if you ever feel overwhelmed by your debts, you can always consider enrolling in a debt relief program to help you pay off your debt with one low monthly program payment.
6. You Haven’t Saved for Retirement (and You’re Not 22 Anymore)
If “I’ll deal with retirement later” is your current plan and you’re already in your 30s or 40s, it’s time to rethink things. Compound interest is magic, but it only works if you give it the time it needs to help your retirement account blossom. It’s a big financial red flag that can easily be fixed!
Here’s a tip on how to fix this:
Even if you can’t max out your 401(k) or IRA right away, start with what you can. $25 a month into an index fund is better than nothing! And, if your employer offers a match, take it! That’s free money. The earlier you start, the easier it becomes. And if you’re feeling like you’re behind, don’t panic. Just start now. To talk in cliches: the best time to plant a tree was 20 years ago. The second-best time? Today.
It’s All About Awareness and Action
Remember, we all have our financial blind spots. The point of this blog isn’t to shame, it’s about raising awareness and showing you how to take action. The red flags we’ve talked about in this blog are all fixable. Every single one.
The key is to face them head-on, without judgment. Start small. Pick one red flag that hit a little too close to home and get started tackling it this week. Then move on to the next. You don’t have to be perfect from the get-go. You just have to be consistent with it. Even if it’s tracking your expenses for a week, committing to putting $25 a month in a retirement account, or making a plan to pay off one of your credit cards.
The earlier you recognize financial red flags, the easier it is to change its direction toward more clarity, being financially confident, and taking back control over your financial future.
And, if you ever feel overwhelmed, you can always check out the other free financial education resources on SmartSpending’s website. Plenty of great information out there! Or just reach out to them for a free consultation call. Whatever you think will help you get back on track. Remember, you’ve got this!
