Financial Problems And Their Underlying Factors

Financial Problems And Their Underlying FactorsThere are a lot of financial problems that you take on and tackle on a regular basis. They all differ from one another in terms of amount and effect that it has on your finances. Some problems can be as simple as a busted light in the house. You just have to buy a new one and replace the broken one in the house and you’re all done.

Then there are times when your problems are not as easy to solve. Getting laid off at work or being faced with a medical emergency can put a pretty big dent in your finances. The problem further compounds when you do not have any reserve funds to speak of. When you are caught off-guard with no emergency money, you could find yourself in a deeper financial hole.

There are also habits that can land you in financial trouble quickly. The sad thing is that you might not even know that you are practicing bad financial habits. Just like making minimum payments on your credit card. It is better than not paying anything at all. However, you are being charged penalties, interest as well as fees on your succeeding payments. This will make you pay more in the long run and that is money you could have saved and invested.

According to Valuepenguin.com, outstanding consumer debt in the US is now at about $3.4 trillion. That is a big amount that people have piled up on their finances and that includes you. However, if you look at debt, you might be quick to point out that the lack of actual funds is to be blamed. What you need to understand is that there could be other underlying factors you are missing out. If this is the case, you might not really be addressing your financial problems and taking on band-aid solutions to cover up.

Here are a few causes you might want to consider as you look deeper into you financial problems.

You lack financial knowledge

One of the primary reasons why you are having financial challenges is that you lack the knowledge to handle your money well. This stems from not having actual lessons either from your parents or in school. This is why there are a lot of people who are advocating the need for teens to learn financial literacy.

You need to have adequate financial literacy or even just the basics to give you a great shot in managing your finances. This gives you the running start that you need to have a starting point. Your parents could have given you the basics from that piggy bank to chores and even opening a bank account. You could have taken financial literacy classes in school. Your grandparents must have tried to give you valuable pieces of advice. Your friend in the bank could have been helping you make better investment choices. All these matters and could help you manage your financial problems better.

One cause of financial problems is when you hate numbers

Another underlying factor that could be causing your financial challenges is the fact that you hate numbers. There are people who don’t really want to fold up their sleeves and crunch numbers. They easily get bored or simply do it haphazardly resulting to mistakes and wrong figures. This can be a problem because you need accurate information when you start to manage your funds.

In fact, Businessinsider.com reported that in a recent survey, the US ranks 35th among 72 countries in math. This goes to show that there are a lot of people who are not really good with numbers. This can cause financial problems along the way when you start to compute for potential earnings and interest payments.

You have no long term goals

When you forego having long term financial priorities and goals, you run the risk of wandering aimlessly in your financial journey. Similar to a ship out in the sea that has no destination plotted out. They will just go around wherever the tide brings them and could even end up going in circles. The same can happen to you

Setting up goals that you want to achieve in the future can help shape your present actions. If you plan to set up a business by age 40, your actions at present need to get you closer to that goal. You might be saving up for the capital requirement or taking classes that can help you manage a business on your own. The point is having goals can keep you in line and help you prevent making wrong decisions which can lead to financial problems.

Your emotions gets the best of you

You will have good days and bad days and your finances can be affected by both. This is because your emotions can play a part in the way you make decisions in life. There can be times when you are too happy and make promises at the height of your emotions. You could also be making rash decisions when you are feeling down.

Your emotions can ultimately cloud your good judgment and make you decide on things that could be detrimental to your finances. One example is retail therapy where are a lot of people swear by. When you are feeling down, you might head out to your favorite shop and start shopping for clothes to drown your problems in. When the statements come in at the end of the month, you see a big amount and do the same thing to forget about it. In the end, it becomes a vicious cycle that puts you deeper in financial problems.

You have an entitlement issue

This is one of the issues that seems to be more prevalent now than before. Frontpagemag.com describes entitlement as an addiction that can add on to your financial problems. This usually entails wanting to get something without putting in an effort to work for it. All because your simply believe you deserve it.

This is prevalent with younger generations especially those that grew up being given everything they wanted simply because they asked their parents for it. They then carry this belief that because they simply want it, they deserve it. The problem with this is the apparent lack of work that has to be put in to get what they want. Rather than saving up for a vacation or a gadget, financial problems would start when entitled people would simply swipe away on their card. They will think about the payment when it comes.

You just copy what everyone else is doing

Consumers need to understand that each person is different. As such, trying to copy how others are managing their finances can spell trouble with your own financial journey. Other people would have different priorities in life and with that, they put together specific actions to get to that goal. If you simply copy what they are doing, it might not be in line with what you want in life. If your friend is saving up simply for a car loan and what you are aiming for is a mortgage loan, you could fall short of what you need as a down payment.

You will encounter a lot of financial problems in life. With this, it is important to understand underlying factors that cause them. As you dig deeper into your financial challenges, it gives you a better chance of fixing the real problem.