6 Signs You're On the Wrong Financial Path

It's easy to ignore your finances in the day-to-day helter-skelter, but here are six signs you need to take action.

If you're like most people, life is busy. Your energy is focused on getting things done, and your emotions are focused on the people you love. It's no surprise that you don't always have time to figure out where you stand financially.

But the problem with not paying attention to your financial well-being is that before you know it, you will need money for things like your children's education and your own retirement. You don't want to discover your mistakes when it's too late and you're facing a major milestone.

Here are six signs that you are on the wrong financial path and you need to pay more attention to your money matters.

1. You feel anxious about your finances

Do you worry about how you're going to pay your monthly expenses or dread receiving a bill for taxes, the dentist, or other periodic expenses? Do you stay awake at night, concerned about how you're going to take care of your financial obligations?

There is no shame in that and you're certainly not alone. But ultimately, anxiety is not lessened by ignoring reality -- you need to grab it by the horns and make some changes.

It may mean cutting back on non-essentials like eating out, subscription services, or expensive cable or cell phone packages. It may mean taking on a side hustle to bring in more money. If you spend more than you earn each month, the only way to gain peace of mind is to lower your expenses or increase your earnings.

2. You have little to no savings

It doesn't matter how much you earn if you don't have enough money in your savings account to cover you when things go south. You could live in a manor house and drive luxury cars, but if you don't have enough money put away to cover three to six months' worth of expenses, you are putting your financial future in peril.

An emergency fund is your financial cushion that will enable you to cover essential bills in the event that you lose your job, face medical problems or other unexpected financial disasters.

One reason people don't have an emergency fund is that they don't realize they can build it up a little at a time. Do you receive two "extra" paychecks each year because you're paid bi-weekly? What about tax refunds, commissions, or small bonuses at work? Stick all of that money into your emergency savings. 

Better still, see if you can save $10 a week on groceries and shave a little off your energy bill. Add the leftover money to the fund. If you make your emergency fund your top financial goal, you'll have plenty of money put away for a rainy day before you know it.

3. You spend money to make yourself feel better

Do you buy yourself a little something when you're frustrated with your boss, your mother hurts your feelings, or your partner is driving you crazy? Do you calm yourself by spending money online or feel more in control as you stroll the aisles of your favorite store? If you spend money to make yourself feel better about life, you're on the wrong financial path. 

You know what feels even better than spending? Saving. If you need proof, see how much you can save in one month and then measure your sense of well-being and control. 

4. You spend money to assuage guilt

Many parents have needlessly spent money on their children to assuage guilt over working full-time, snapping at them in a moment of frustration -- or as a way of coping with a major life change like divorce or a new sibling. If you're someone who spends money to feel less guilty, you likely know that it does not work. Instead, spend time with the person you're trying to make it up to. Play a game, take a walk, or otherwise show them you're interested in their life. That experience will last far longer and be more meaningful than any toy or tchotchke ever could.

5. You buy things to follow trends

As humans, we want to fit in with our pack. Part of that is a desire to look like the people we admire. Our taste in everything -- from tennis shoes to eyeglasses -- is influenced by how we believe we appear to the people we hope to impress. The problem with that is this: Manufacturers systematically change styles and advertise so that we have to keep buying. Those jeans you just purchased? They are so last year. 

If you're someone who is desperate to look fresh and on-trend, there's a very good chance you're on the wrong financial path. Even if you make plenty of money, have fully funded an emergency account and are working toward retirement with zeal, the money you spend to chase trends could still be used to better protect your financial future.

6. You don't have any financial goals in place

If you spend money each month without any sense of what you want to achieve, you're on the wrong path. It may seem intimidating, but planning for the future is pretty basic:

• Create a realistic budget
• Decide where you want to be and how much it will cost to get there
• Come up with ways to fund those goals
• Don't be afraid to ask for help from a professional if you need it

If you recognize yourself in any of these six signs, don't lose heart. Instead, treat it as a wake-up call to take control of your finances and get yourself on the right track.