10 Steps to Overcome Financial Problems

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For many People financial concerns are ever present, especially given the uncertainties of today’s economy. While worrying doesn’t solve much of the problem, having a plan to manage your financial challenges can really help ease some of the stress. And financial literacy may be a solution for most of us.

I believe that the best way to cure anything is to understand the cause and then find ways to eliminate it, rather than just looking for short time solutions to suppress it. Suppressing it is only temporary, if you don’t find a solution for the cause, you will keep seeing yourself in the same situation over and over again. Short time solution only treats the condition temporarily but does not solve the problem.

Main Causes of Financial Mismanagement

The number one reason people get into trouble with their finances is because they lack the skills or financial education to manage their money. Let’s face it, if no one has taught you the basics of money management and budgeting, how would you learn? Or even worse you may have picked up some bad habits from your Parents who probably never had any lessons on money management themselves. It’s a vicious cycle there’s a way out.
Learn to Manage your money for free.

The Main Causes of Financial Problems
  1. Expenses are greater than income. You spending more then what you earning. You’re maxing out the credit card. It’s a spending habit that turns into an addiction.
  2. Living Paycheck to Paycheck. You count the days by the 25s hopping you’ll make it to the next. You always totally wipe-out your salary paying off your debts and expenses.
  3. Debt often make you feel shame or disgrace that often destroys relationships between friends and family members. Paying a big chuck of your salary over a long period makes it worse. Depth is expensive.
  4. Lack of financial plan. Most people lose control of their finances because they don’t just financial literacy but they also lack financial planing and goal. Instead they sit there in their dignity that floats aimlessly in the middle of an Ocean of spending.

Overcoming Preconceptions

Before you can solve your financial problems you need to overcome the following preconceptions.

  1. If only I had more money. Although it’s natural for us to want more money when we experience financial problems. What you need to know that simply getting more money will not solve your problems, if you don’t change the way you manage your money, more money will not save you. So I suggest you shift your focus from changing you income to changing your habits.
  2. I can’t afford it. It’s okay to indulge yourself in purchasing expensive items and experiences that are meaningful to you and won’t put you in debt.
  3. Stand up to pressure. Study where your money is going by regularly tracking your expenses, so you can keep adjusting your spending. And if you fail don’t beat yourself up, just keep trying, financial wisdom takes time to learn.
  4. I deserve a treat attitude. This attitude drives you to make impulsive purchases to reward yourself for hard work or give yourself some other emotional gratification. Remember buying things on impulse wastes lots of money.
  5. I’ll fake it til I make it. This attitude leads you to buying things you can’t afford to simply make you appear wealthy. This kind of behavior can get you into real trouble with your finances. Trying to impress other people socially through an image of wealth is not the way to go.

Overcome the Source of Financial Problem

Money may make the world go round, but it can as easily turn your world upside down. The source of excessive pleasure, it’s also a cause of extreme pain. Money Problems can feel impossible to solve sometimes, but that’s not true.

Financial Illiteracy

The cry for the need of financial literacy cannot be overstated. The good news is that managing finances is not an innate skill, but something that is learned like math, reading and writing.

Unfortunately, financial literacy is rarely taught in our Schools. So people have to take the initiative to educate themselves about the topics such as budgeting and living within one’s means, paying the bills on time, managing credit and debt, making regular contribution to savings and planning for retirement.

10 Steps to Overcome Financial Problems

First thing, one needs to do is identify exactly where the problem lies. Many people avoid this step because they don’t want to know how bad it really is. However it’s difficult to deal with the issue if you don’t understand it.

  1. Identify the Underlying problem.
    Write down your biggest money challenges so you know what you’re up against. Weather it’s making your monthly bill payment, saving for retirement or reducing your credit card debt. Its important to focus on the main source of your financial problem.

  2. Increase your spending awareness.
    Once you have your spending tracking system in place, you can begin the process of raising your spending awareness. Start by knowing what you spending on. Before you spend ask yourself the following questions,
  • Is this something you really want and need?
  • Will this help me reach my goals?
  • Do i really need this?
  • Would this money be better spent else where?
  1. Challenge your attitude towards money.
    Your attitude plays an important role in attracting money into your life or driving it away. Get a little obsessed with money, track every spending and everything you doing with your money.

  2. Determine your Financial priorities.
    The first thing you need to do is review your spending for the past 3 months. Understand the difference between your wants and your needs. A need is something you need to survive, a want is something that isn’t necessary but likely adds value to your life.

  3. Track your spending.
    Tracking your spending on a regular basis can give you an accurate picture of where your money is going and where you’d like it to go.
    Check your account statements, pinpoint your money habits by taking inventory of all your accounts, will help you pin point where your money is going.

  4. Create a budget.
    One of the best ways to combat financial problems is a budget. A budget is a monthly spending plan for your money. With a budget you can no longer wonder, it will guide you on where you need to spend your money. You can download a free spreadsheet here.

  5. Create a plan to pay off your dept.
    If you have dept that has accumulated slowly over the years, you need realistic dept solution that works for your life style, not a quick fix that you cannot live with for a long time. Dealing with dept sooner then later gives you more options in future.

  6. Educate yourself.
    Financial literacy is the knowledge necessary to make important financial decision. It is important because it equips us with the knowledge and skills we need to manage money effectively. Without it our financial decisions and actions and actions we take or don’t take lacks a solid foundation for success.

  7. Start an Emergency Fund.
    Pay yourself first, no matter how much you owe in your credit cart debt, or how low your salary may seem, find some amount, intact any amount from your budget and save in your emergency fund every month.

  8. identify expenses you can reduce.
    Over the next few months identify areas of your budget that need some special attention. Look for ways to decrease your spending. identify product and services that you no longer need but still paying for it. Now all you need to do is identify what expenses you can reduce on and then create a plan to follow through.

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