According to one survey, almost two-thirds of workers report experiencing ongoing financial stress. While the state of the economy and inflation both play a role, the main source of stress is their money problems!
Whether you realize it or not, most money problems are self-inflicted. When you’re mismanaging money and your finances are out of order, you’re going to experience stress. On top of that, your quality of life and financial well-being are going to suffer, too!
Money problems tend to stem from the way you manage your finances, or in many cases don’t manage them at all. Rather than ignoring your financial position and hoping it improves, you have to confront it. This way you can figure out where you stand and therefore what you need to do to improve. As a result, you’ll begin to experience less stress and more peace!
With that being said, here are 10 major money problems and how you can solve each one!
One of the most common money problems in America is living paycheck to paycheck. When you’re caught in this vicious cycle your not only struggling to get by, but you’re also constantly worrying about running out of money. To make matters worse, you’re unable to save and get ahead, either!
Truth be told, some people struggle because they don’t earn a living wage. If you don’t earn enough money to cover your basic financial needs then it’s going to be difficult to survive.
If this is the situation you find yourself in, then one way to earn more money is by investing in yourself. With new skills, you can earn a higher income. In turn, paying bills gets easier which helps ease your financial pressures, too!
Still, it’s important to realize that even with a good income you may struggle. In fact, one study found that almost half of workers earning $100k per year or more reported living paycheck to paycheck!
One way to solve this money problem (and most others for that matter) is by creating a budget. With it, you’ll have greater insight into the amount of money you have coming in and the places where it’s going out. By understanding your needs vs wants, you can find places to cut back. As a result, you’ll spend less and save more!
According to a Federal Reserve Survey, 31% of respondents reported that they have no retirement savings. If that wasn’t bad enough, almost 50% of them have given little to no thought to their retirement at all!
As you approach your Golden Years without retirement savings, your stress levels will only grow. Not to mention, you likely won’t ever be able to stop working and be truly free, either!
If you want to have a happy retirement, you have to start saving. With savings, you can pay down debt, build a strong financial foundation, and invest. As your nest egg grows, you’ll eventually reach the point of financial freedom which allows you to stop working and do whatever you please!
Another major money problem is having large amounts of consumer debt. In America, the average family owes over $6,200 on their credit cards alone!
When you take out consumer debt, you begin wasting money on interest. Not only that, but you have a higher burn rate, too. Now, you’re forced to earn more money which only increases the financial pressure to make ends meet!
Getting forced to work (or do most things for that matter) isn’t going to make you happy. Instead, it’s going to restrict your freedom and cause needless pain and suffering!
But, if you can find ways to save money, then you can start paying down your debt. As you do, you’ll have fewer bills to pay which gives you more breathing room!
If you have high-rate consumer debt, then you need to pay it off. The two best ways to do that are by using the debt snowball or debt avalanche. Either way, once your debt is gone, make sure it doesn’t come back!
Oftentimes, consumer debt stems from living beyond your means. Regardless of whether you fall for retailers’ marketing gimmicks or struggle to control impulsive purchases, spending money that you don’t have will put you in debt!
On top of all the debt, living beyond your means leads to many other money problems, too. Your overspending prevents you from saving. Without savings, you won’t have a financial safety net to rely on. Now, a sudden drop in income or an emergency expense could lead you straight into a personal financial crisis!
To stop living beyond your means, you have to curb spending. You could try switching to an all-cash budget, taking a money-saving challenge, or reducing your monthly expenses. Nevertheless, when you start living below your means, you’re going to save and experience fewer money problems!
Whether you realize it or not, emergencies are a part of life. They’re going to happen regardless of whether you’re prepared for them or not!
Unfortunately, most Americans struggle to save. Therefore, they don’t have rainy day savings or an emergency fund. When disaster strikes, they’re forced to use credit cards or take out loans – both of which only make their money problems worse!
Since emergencies are going to happen, it pays to prepare for them now. Start by setting aside 3 to 6 months of your expenses. This way, if your car breaks down or you need urgent medical treatment, you won’t have to stress about finding the money. Instead, it will already be in your bank account waiting!
Also, it’s important to realize that some people are tempted to spend their emergency funds on things that aren’t really emergencies. If this is you, it can be helpful to define what an emergency is. This way, you’ll establish guidelines that determine when it’s appropriate for the funds to get spent.
For one reason or another, people also tend to make poor financial decisions that cause their money problems. For instance, they may buy status symbols and other material goods at prices they can’t afford. Even though this may give others the impression that they’re rich and wealthy, it actually ends up keeping them in the poor house!
Unfortunately, keeping up with the Joneses is a major source of people’s money problems. When you’re constantly striving to buy bigger, nicer, and more; your finances are going to get stretched thin. Not only that, but your financial health is going to suffer, too!
Rather than trying to look rich, learn how you actually can be. Start by getting a financial education and practicing the money skills that will help you build real wealth. After all, real wealth isn’t attributed to possessions, it’s based on how you can afford to spend your time!
Another reason that so many people have money problems is that they confuse assets and liabilities. At the most basic level, assets put money in your pocket whereas liabilities take it out!
With that being said, buying a more expensive home, vehicle or boat isn’t going to help you build wealth. Instead, they’re going to consume a larger percentage of your income and leave you with fewer savings. Not only that, but they’re also going to handcuff you to a job and force you to work more so that you can afford them!
Rather than buying liabilities that consume your earnings, buy assets that generate income. This way, your money will start working for you and you can earn it while you sleep!
If you’re like most people, it’s easy to get carried away and lose track of your recurring costs. On a whim, you may add another streaming service, subscription, or other memberships. But over time, these expenses begin to add up!
While many subscription services are low-cost, you still have to pay them every month. Throughout the year, this can add up to hundreds or even thousands of dollars. If you don’t use the service and get your money’s worth, you can easily end up flushing some of your hard-earned cash down the drain!
However, reducing and eliminating your recurring costs is an easy way to save money and reduce financial stress, too. For example, if you have multiple streaming services (and I know you do) try eliminating all but one of them. This way, you’ll still have entertainment, but you’ll only have to keep up with one bill. Not only that, but when you get tired of the service, you can cancel it and switch to another one without wasting money!
Even though reducing your recurring costs may not seem like much, over time it makes a big difference. By reducing them today, you won’t just save once, you’ll save in all the months that have yet to come!
The way you manage your money today is going to determine the success (or lack thereof) that you have in the future. If your only concern is the present, you’re going to spend until your heart’s content and your pockets are empty. As a result, you’re not just going to have money problems today, you’re going to have them in the future, too!
One way to start looking into the future is by thinking about the life you want to lead. As your vision takes shape, you’ll discover what excites you and what you want to work towards. Also, consider where you want to live, who you want by your side, and how you’ll spend your time. With this information, you can estimate the costs as well as your freedom number which is the money you need for it all to come true!
Having a vision of your future gives you a long-term goal to work towards. Not only that, but it allows you to reverse-engineer the steps you need to start taking today. Once you know the first step, you can set a SMART financial goal to push towards. As long as you stick to your plan and keep progressing forward, eventually your vision will become your reality!
Although it’s rare, some money personalities have a hard time enjoying the wealth they’ve created. Despite having a healthy financial statement and plenty of savings, it pains them to spend it!
For everyone else, great joy is found in spending. We’re able to use money to have fun, create memories, and enjoy our happy expenses. As long as you’re enjoying money while also saving it, your financial worries will ease and your quality of life will improve!
If spending and therefore enjoying money is challenging, consider setting a monthly spending goal. Going against conventional wisdom, you may need to force yourself to buy things you want and don’t need. Not only that, but you may find that life is much more exciting and enjoyable when you part with some of your hard-earned money, too!
Also, take some time to explore what may be preventing you from spending. Oftentimes, deep-rooted money fears or an unhealthy money mindset can be preventing you from being able to let it go.
Unfortunately, most money problems are a result of people’s spending. When it gets out of control, no amount of income will solve their problems. Not only that, but their problems will only get worse, too!
Luckily, your spending is within your circle of control. As long as you can keep it in check and live within your means, then you’re going to save. With savings, you’ll feel less stress and less pressure. Not only that, but you can also make your money problems disappear once and for all!
What other money problems are causing you stress? Comment below.
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