When a restaurant looks filthy, you notice. When your date leaves his wallet at home, that’s noticeable too. And when a mechanic recommends a stack of expensive repairs you didn’t expect, alarm bells should ring.
There are also money-related warning signs. Life will send you little signals that your finances aren’t where they should be. For instance, getting hit with an overdraft charge is a pretty clear hint your money situation needs attention.
As we get older, we try to shrug off these warning signs, but some are stubborn. Below are several common financial red flags to deal with before you turn 40 — plus straightforward steps you can take to eliminate them this week.
Red Flag No. 1: You Don’t Have a Budget
Do you actually know what portion of your pay goes to housing? Or how much you spend on eating out each month? Have you set any financial goals recently? What does your emergency fund look like?
One of the easiest ways to spot — and fix — multiple financial problems is to make a budget. Yes, budgets feel tedious. That’s why the 50/20/30 rule is so helpful: it’s very simple to follow.
Here’s the breakdown:
- 50% of your take-home pay goes to living costs. That covers rent or mortgage, utilities, groceries, car payments, gas and loan obligations.
- 20% of your income goes toward financial goals, such as savings, investments and extra debt payments beyond the minimums.
- 30% of your earnings is for personal spending — the rest of your discretionary expenses.
By putting a budget in place, you’ll be able to spot — and eliminate — several money red flags and feel more secure about your finances.
Red Flag No. 2: You Owe More Than $5,000 on Credit Cards
If you carry credit card balances, you already know the stress: the high interest, the sleeplessness, the fear you’ll never climb out.
And truthfully, the credit card companies are profiting from those high rates. But a site called AmOne aims to help.
If your total credit card balances reach $5,000 or higher, AmOne can match you with a lower-interest personal loan to consolidate and pay off those cards.
The upside? You’ll have only one monthly payment to manage. Because personal loans typically carry lower interest, you’ll likely pay off debt faster.
AmOne won’t make you visit a bank, and checking eligibility is free and quick online. It takes about two minutes, and it could be the solution that removes this financial red flag for good.
Red Flag No. 3: Your Family Depends on Your Paycheck
Have you considered how your household would cope without your income if something happened to you? How would bills be paid or children’s schooling be funded? Now is the time to protect your family by exploring term life insurance.
You might be thinking you don’t have the time or funds for that. But an application can take just minutes — and you could leave your loved ones up to $1.5 million with a company called Bestow.
Policies can start at roughly $20 a month.* And the reassurance of knowing your family is protected is invaluable.
If you’re younger than 54 and want a quick life insurance quote without a medical exam or leaving the couch, get a free quote from Bestow.
Red Flag No. 4: Your Credit Score Is Under 700
Another warning sign is a less-than-stellar credit score. When you want to finance a car or buy a home, your credit rating will heavily influence your options and the interest rates you receive.
Sometimes a hidden mistake on your credit report (about one in five reports has an error) could be dragging your score down.
Fortunately, Credit Sesame offers free tools. It lets you check your score, locate (and dispute) inaccuracies and offers tips to boost your rating.
Consider James Cooper. He knew nothing about credit management at first, but Credit Sesame guided him on the exact steps to lift his score — from 524 to 801.
And people like Salome Buitureria, a working mom in Louisiana, found a major error through Credit Sesame. The site helped correct the issue and guided her toward actions that raised her score by nearly 200 points.*
Interested? Signing up takes roughly 90 seconds to begin.
Red Flag No. 5: You’re Paying Too Much for Auto Insurance
When was the last time you compared car insurance prices? There’s a good chance your current policy is costing more than necessary.
If it’s been over six months since you shopped for a new quote, now’s a great time to check.
Using an online marketplace called SmartFinancial, you might see rates as low as $22 a month — potentially saving you more than $700 a year.
It takes only a minute to request multiple quotes so you can compare the best offers side-by-side. In a minute, you could discover an annual saving of about $715 — a meaningful boost to your budget.
If you haven’t revisited car insurance rates lately, see how much you could reduce your premium with a new plan.
Red Flag No. 6: You Don’t Have a Retirement Strategy
If you haven’t started saving for retirement, begin now. The earlier you begin, the more time your money has to grow.
If your workplace offers a 401(k), make sure you take advantage of any employer match — it’s essentially free money. If you’re already at the full match, try increasing your contribution by at least 1%.
If there’s no 401(k) available or you’re self-employed, consider contributing to a tax-advantaged IRA. Set up automatic contributions so you save consistently.
Red Flag No. 7: You Haven’t Claimed These Free Stock Offers
If you think you need a lot of money to begin investing, you’re not alone. But you don’t need much, and you can even get free stock (sometimes worth up to $500) if you know where to look.
Whether you have $5, $100 or $800 to spare, you can begin investing with Robinhood.
Chances are you’ve heard of Robinhood. It’s popular with rookies and experienced traders alike because it charges no commissions and allows commission-free trading. The app is also user-friendly.
Best of all, when you download the app and fund your account (it only takes a few minutes), Robinhood gives you a free share of stock. The stock is random and could be worth anywhere from $5 to $500 — a helpful kickoff for your investment journey.
*Like Cooper andBuitureria,60% of Credit Sesame members see some increase in their credit score; 50% experience at least a 10-point gain, and 20% see at least a 50-point rise after 180 days.
Credit Sesame does not guarantee these outcomes, and some users may see their scores decline. Any improvement depends on multiple factors, including timely bill payment, maintaining low credit balances, avoiding unnecessary inquiries, sound financial planning and cultivating better credit habits.
*Bestow: Policies are issued by Bestow Life Insurance Company, Dallas, TX on policy form series BLI-ITPOL. Bestow Life Insurance products may not be available in all states. Policy limitations or restrictions may apply. Not available in New York. Our application asks lifestyle and health questions to determine eligibility in order to avoid requiring a medical exam. Prices start at $10/month based on an 18-year-old male rated Preferred Plus NT for a $100k policy for a 10-year term. Rates will vary based on underwriting review.
Alex Mercer is a senior writer at Savinly.
