Finances are hard; economic anxiety is a term that keeps coming up when we talk about this generation and the last. There is a tremendous amount of stress that comes with financial problems and this has grown progressively with time. It is getting harder and harder for the average citizen to pay their bills, meet their dues, and still have money left over to live decently. As the situation spirals more and more out of control, it is perhaps worth it to understand the underlying causes; the things that build up to difficult financial situations for you and your peers.
As per https://www.forbes.com, “Financial challenges, such as unemployment and abundant debt, can attack a person’s self-worth and lead to depression. Plus, physical problems can begin to compound when high levels of stress continue for prolonged periods of time. What starts with clenched teeth, tense muscles, and low energy can eventually turn to heart attacks, hypertension, and impaired immune system.”
Poor Money-Management Skills
The most fundamental reason for financial trouble is the inability to manage capital properly. Wealth management and budgeting skills are never taught in school or college; we just wing it and take it as it comes. You may have inadvertently picked up whatever you know of budgeting from your parents or other influencers in your life, who might not have been great at it, causing a pretty vicious cycle. You need to break out of this by actually spending some time to familiarize yourself with simple budgeting concepts and tools. If you are able to draft a solid budget plan going into a month, you will find things moving much smoother than usual.
Income Takes a Hit
The economy is in pretty poor shape. Every day we see people who were in relatively comfortable well-paying jobs being laid off because their companies are being forced to downsize. The job scene is extremely crowded with all kinds of candidates and not enough jobs. You could be jobless for a while and still have to switch to a lower-paying job to make ends meet. This situation can be easier to handle if you have a few months’ worth of savings kept away, as you can use those to meet your monthly payments for debts and other bills. If not, you should definitely reach out to creditors to keep them apprised of the situation and see if they would be willing to work out a mutually beneficial arrangement. If that does not work out and you see no hope on the horizon, perhaps debt management, settlement, or consolidation option is the right way to go for you.
Marital and Family Problems
Couples obviously tie the knot to stay together. However numerous marriages are breaking up and the primary reason for divorce is financial problems. Often divorces due to financial instability may lead to more financial issues as you would be compelled to survive on just one income. Moreover, numerous relationship issues would be cropping up. Communication is the key factor. You must create a realistic financial plan and talk more about money matters to make sure that you are making efforts to achieve the same goals.
Medical & Health Expense
Can you imagine how things would be if you suddenly met with an accident and then go out of work for a prolonged period of time? Your income could go down drastically to as low as 40 percent of your regular or normal income. Apart from a drastic reduction in your income, you would have to spend on medical treatment and other expenses like physiotherapy, medication etc. During this period, your intention is to get well soon and then focus on keeping track of your spending so that you can manage with your limited income now.
Education Costs Involved
Even though parents want their children to study well, get a proper education to grab good job opportunities, they do not actually realize that they require saving a substantial amount for ensuring good education to their children. Moreover, they need to keep aside at least, from $40,000 to $60,000 to dedicate to the kids’ education. If your kids take student loans, they would be stuck with repaying the loans for many years to come. You would initiate your first job while technically you are already in debt amounting to your entire year of salary. Thanks to the increasing student loans and dipping housing market scenario, life seems to be becoming harder for the younger generation.
Excessively High Debt Levels
Debt levels are going up incredibly fast as compared to both assets and incomes. Today it is really easy to access debts in numerous forms such as mortgages, lines of credit, credit cards, etc. You are now able to buy whatever you like using your credit card. Debt is rising and has already created a major financial crisis worldwide. People are still shaken from the tremors of the economic recession in 2007. We have witnessed the fact that the debt issue has been triggered by consumption and consumerism. People are not willing to wait for something they desire to buy. They do not any longer practice delayed gratification instead they practice delayed consequence. People are spending money that they do not have. Avoid getting into overwhelming debts. If you are already sinking into debts, go through debt consolidation ratings online to choose the best debt consolidation firm for professional assistance.
Unpredictable Stock Markets
During the greater part of the 1990s, we know that wealth was generated by the active stock market and we experienced a long and robust financial boom. Unfortunately, stock markets are supposed to be volatile and do not generally move all along a straight line. They keep fluctuating and experiencing cycles. For investors, the period from 2000 to 2010 was a flourishing one. The stock market has often destroyed wealth instead of generating it.
You need to identify the roots of your fiscal woes and try to find perfect solutions. You need to eliminate worries and stress related to financial issues. Make conscious modifications in your lifestyle to steer clear of financial issues and enjoy financial stability.