Financial problems come with worries, once you start experiencing money issues you start getting stressed. Adults are expected to know how to manage their finances but the fact is that many of them have skipped that class or they had never had the opportunity to learn how to save money. If you find yourself in this situation, you should worry because everyone is experiencing financial challenges at a certain point in their life. You should not feel depressed, you can get over this situation you only need some guidance. It is important to identify the sources of financial problems and to find solutions for every one of them.
What problems are causing you financial challenges?
Financial problems are often the result of a bigger problem, and in order to have a better financial life, you will have to identify the source of the issue and to solve it.
- You are experiencing an addiction that makes you spend more than you afford. Often the persons who are suffering from an addiction end up getting loans to cover their expenses. The best way to solve this problem is to seek help, get counseling for your addiction, and once you will fight it, you will find a solution for your financial problems.
- You are emotionally attached to something. This is a common case, people are not willing to part with something they no longer afford, like their car, house or business. You have ended to a point when you do not afford to let your emotions guide you; you need to picture your life in 5 years from now and understand what the best option for you is.
- You have divorced. Sometimes when the divorce is settled one of the partners gets a house they do not afford to keep because of their income. Your leftover bills will finally lead you to get a loan to pay for them if you have not already taken one. Downsize to a house you can afford and use the extra cash to cover your debts.
- You have a new baby. Often parents-to-be do not fully understand the extent of expenses they will have once the child is born. Other times they have welcomed an unexpected baby and they understood that they have difficulties in adapting to their new life. The solution is to adjust to your new life, recalculate your expenses and see if there are ways to cut them down.
- You have decided to move out on your own. When living with your parents you had no idea how many expenses come with having your own house. Once you left their home, you have been surprised by the number of bills you have to pay. You will have to live on what you earn and adjust your expectations.
Steps that can help you overcome your financial problems
Once you identify the factor or factors that lead to your financial challenges, you should decide what plan is the best one for solving them.
- Determine what your priorities are. No matter what the cause of your financial problem is, you will need to determine what your priorities are and to direct your income to those expenses. Once you will know what your priorities are you will find easier to make financial decisions.
- Create a budget. Now that you know, what your priorities are and what the cause of your financial issues is, you should create a budget. You will need to include in your budget the expenses you have monthly and understand if you have enough money to pay them. The expenses should reflect reality. If you have no idea what expenses require most of your money you should use an app to track them. Once you have your budget set you should check it with a critical eye, and determine what aspects can save money.
- Take small steps. In the majority of cases, the best way to solve your financial challenges is to reduce your expenses, look for alternative income options and if you can combine the two of them. In some cases, this solution may not be effective. Sometimes people have multiple loans they have to cover and they are having difficulties keeping up with them. In this situation, the best strategy is to get an individual voluntary arrangement. It will allow you to make affordable monthly payments towards a percentage of your debt for a limited period. When the period is over the rest of the debt will be written off and you will no longer experience financial problems. People often have difficulties in making big changes but when it comes to small steps, it is always easier.
- Find a replacement for one of your large expenses. Sometimes the daily habits people have are the ones that cost the most. If you can cut an expensive habit and replace it with a more affordable one, you will be able to save money and cover one of your debts. For example, some people prefer to buy coffee from Starbucks in their way to their office. It is an expensive habit to have. Instead, you can buy a reusable cup and make your own coffee at home. With some spices and extra ingredients you can get the same taste Starbucks coffee has, look for recipes online for inspiration.
- Live only on cash for 14 days. People often have difficulties to track their expenses when they are using a debit card. Using a credit card or a debit card generate bad money habits and you should try to use them only when you need to pay high amounts of money. When you use only cash, you stay away from the blur debit and credit cards generate. You will have no difficulties in determining if you can afford a certain expense or not. When you need to buy something, use cash and after 2 weeks you will notice that you have managed to save more than you have ever done.