Mila Joshua Yona
Are you struggling to stay out of debt? Do you feel like you’re constantly pressured to keep your head above water? You’re not alone! Countless people around the world are in the same situation.
In this blog post, I will discuss with you about getting out of debt and staying afloat financially.
So let us dive into the article for helpful tips and advice.
What causes financial problems?
1. Lack of financial literacy
The number one cause of financial problems is lack of financial literacy.
Financial literacy refers to the ability to understand and make use of financial skills and concepts to make informed decisions about personal finances.
In other words, to be financially literate means that you know how to manage your money. In any case, also knowing how to pay your bills, how to borrow and save money responsibly, and how to actively invest and plan for your retirement.
Unfortunately, only a handful of people have a basic understanding of financial literacy and that makes them find themselves in difficult financial situations oftentimes.
There are several reasons for this;
- Lack of financial skills such as personal finance management and budgeting, can be complicated and challenging for beginners and people without self-discipline.
- Schools often neglect teaching students the aspect of financial literacy pushing young people to discover on their own.
- The media often projects conflicting and inaccurate information about personal finance thus making the whole concept more challenging.
Although financial literacy is a significant problem, it can be resolved through self-awareness and educating yourself about finances.
2. Unforeseen circumstances
Other times, financial problems are caused by uncertainties such as job loss, illness or divorce.
Such situations can be difficult to manage independently because they present tough times ahead.
However, you can solve some of them in the following ways;
- If you are going through a divorce, financial resources are often available to help you with legal costs and child support.
- If you are dealing with a serious illness, several organizations can help with medical bills and other expenses.
- In case you lost your job, you may have access to unemployment benefits.
Whatever situation you are dealing with, there is always some assistance available.
3. Lack of financial advice
Another common cause of financial problems is often the lack of professional financial advice.
Many people are often reluctant to seek professional financial advice simply because they do not want to admit that they need such help or they think it is expensive and they cannot afford it.
Nevertheless, the fact remains that not getting professional help can be a very costly mistake.
A professional financial advisor can help you make wise investment decisions, make a budget that works for you and plan for retirement.
If you are not sure where to find a good financial advisor, start by asking your friends, colleagues, and family for recommendations. You can also check with your credit union, or bank or research online for reputable financial advisors in your local area.
3. Poor Budgeting
Another cause of financial problems is the habit of poor budgeting.
Many people often live paycheck to paycheck with little to no savings at all making it difficult for them to cover unexpected expenses like car repairs or medical bills.
It can also make it difficult for them to plan for long-term goals such as retirement.
If you are not sure how to create a budget that will work for you, make use of online resources like YouTube to learn more about it.
You can also find helpful books and articles online or talk with a professional financial advisor and get assistance.
4. Debt
Debt is another major cause of financial problems.
In fact, debt places your financial health at increasing risk due to the increasing cost of repaying your debt.
Loan debt, student loan debt, credit card debt, and medical debt are all types of debts that can cause financial difficulties for many people.
Debt can make it difficult to make ends meet, cover unexpected expenses and save for the future.
Financial Problems Solutions
Since we have looked at some of the most common causes of financial problems, let us explore now some of the solutions to financial problems.
You can take several measures to stay out of debt and stay afloat.
Some options include:
1. Creating a Budget and Sticking to it.
Making a budget is a great start. Find out where your money is going and how much you can realistically afford to pay each month. Then adjust your spending habits. If you are used to eating out every night, try cooking at home more. If you have a gym membership that you never use, cancel it immediately.
2. Cutting back on expenses
Cutting back on your expenses can help you free up some extra cash each month to pay your debts. However, it is crucial that you ensure that you are still maintaining a healthy and happy life.
You do not want to cut out all the fun in your life to save a few bucks.
3. Finding ways to increase your income
Finding other ways to increase your income is another option. If you can get a promotion or raise at work or even pick up some extra hours at work, the extra cash can go towards paying your debts. You could also look into getting a side hustle. There are plenty of ways to make some extra cash these days.
4. Asking for help from a financial advisor or credit counseling service
If you are struggling to get out of debt on your own, you might need to consider asking for help from a financial advisor or credit counseling service. These professionals can help you create a plan to get out of debt and ensure that you are on the right track.
Several options are available to you if you are struggling with financial problems. By taking time to figure out what is causing your problems and making a plan to address them, you can get back on track and start living a debt-free life.
5. Take a reality check
The cause of financial problems is sometimes a simple lack of awareness of what you are spending on especially the daily small amounts that seem insignificant at the time.
To take a reality check, you need to record every cent that you spend for a month, whether by using a budgeting app on your Smartphone phone or recording on a paper in your wallet or purse
You would find that for most people, their expenses would amount to about 30% more than they had expected because their budget has not captured all those small expenses.
However, once you have an idea of what you are spending, you will begin to make an honest budget that will help you regain control of your financial situation.
