Have you ever started your car's engine and heard a noise that felt out of place? If you have, there’s a good chance you approached it in one of two ways: ignoring it or checking to see if something is wrong.

Your finances are a lot like your automobile: if you don’t address possible problems when they arise, then the chances of these issues returning in even bigger ways increase.

Now’s a good time to take stock of your financial habits and see if there’s room for improvement. Below are some common financial warning signs and suggestions for rectifying them.

The Absence of an Emergency Fund

An emergency fund is a collection of savings for moments when one needs it. Ideally, it’s a fund that you have but never need to use. At the same time, it provides breathing room for unexpected situations.

Emergencies come in many different forms, such as:

• Sudden onset of illness
• Car breaking down
• A home appliance breaking
• Loss of employment
  

For situations like these, having some extra cash can make a big difference in the immediate future.

Being without an emergency fund is like going on a road trip without a spare tire. You could be kept at a standstill if something goes wrong, complicating your current situation.

If you don’t have an emergency fund or it looks critically low, then it’s time to adjust your savings strategy. How much you need to set aside will depend entirely on your lifestyle, preferences, and material needs. A popular recommendation is to set aside the equivalent of three to six months of your total living expenses as a goal.

It’s never too late to start an emergency fund. Setting aside ten dollars a day can make a significant difference in the long run. Remember that your emergency fund is reserved for situations where spending money is unavoidable. Therefore, putting your emergency money in a separate, dedicated account makes sense.

Only Making Minimum Payments on Credit Cards

Credit card debt is one of the biggest traps to always be vigilant against. It is never advisable to only make the minimum payments on a credit card bill, mainly due to how interest charges work.

An outstanding balance will accrue interest, and leaving it alone will only make you owe more money as long as the balance remains. At worst, credit card interest will compound and quickly grow out of hand if you never pay things down.

To avoid falling into credit card debt, implement a policy that keeps you from relying too much on charging. For instance, only charge for things if you have the money to cover them. That way, you’ll know it’s possible to pay off your balance while building your credit score.

If you have outstanding balances on credit cards, try to prioritize what to pay back. We have some tips on managing multiple balances. All in all, it’s important always to pay more than the minimum so that you are paying down the balance.

Needing To Choose Which Bills To Pay

In our contemporary society, paying bills seems to be a fact of life. Many of our bills, like food, fuel, and housing, are unavoidable. At the same time, it’s never a comfortable thought to be at a point where you can only pay for one of these things and not the others.

If you’re overwhelmed by bills, it’s probably a good time to re-evaluate where your money is going. Every month, review your bills and determine if what you’re paying for is what you need. More often than not, the services we don’t use burn the biggest holes in our wallets.

Try to identify frivolous subscriptions and services and see if you can downgrade to a cheaper package or cut them out altogether. Some places to start include:

• Subscription-based meal plans
• Streaming and gaming live services
• Periodical subscriptions
  

Additionally, check your grocery spending and see if there are lower-cost alternatives. For instance, some food items are only more expensive simply because of brand recognition. If you can turn to generic or store-brand items, it can save dollars with every visit.

Another way to save on your bills? Try to reduce your water and electricity use. As the weather warms up, turning on the heater might be wasteful. Giving your home appliances a break occasionally might help lower your usage rates through the next billing cycle.

Addressing Financial Warning Signs Effectively

If you are running into the above situations, it is a good idea to address them now. Remember: ignoring a problem will only make things worse.

Take action with money matters as often as possible. It helps to assess your income and spending regularly, like every month. Keeping tabs on your budget gives you real-time information to make better decisions and find room for improvement.

Be proactive and optimistic. Worrying about something doesn’t make problems go away. Only action can do that. If you require assistance with outstanding debt, call your card or loan servicer to discuss the possibility of being put on a different payment plan.

You can also turn to your financial institution for tools to help you meet your savings goals. First Florida Credit Union offers different savings accounts that allow you to put money aside for a rainy day. They also have resources that will enable you to adopt good financial habits. Explore our website to learn more.