Everybody desires to have financial independence and stay away from debt. However, the majority are living paycheck-to-paycheck or are carrying a great deal of debt. Anyone who has been in debt will tell you that debt can be harmful and stressful. A debt can hit back at you physically, emotionally, socially and psychologically.
Many psychologists are active advocates of having a meaningful and purposeful life. This leads to feeling happier, satisfied, and allows one to maintain a positive disposition. Sadly, financial stress will not allow this to happen. It comes with a reduced sense of a person’s self-worth.
Apparently, there are those who tend to believe that happiness is all about money. The notion is primarily with young people who do not have any saving plans. However, it would be wrong to equate happiness to money. Many are the times we find ourselves holding onto “what will happen tomorrow.” More often, our life events are significant contributors to our financial struggles.
What are some of these life events?
#1 Decreased income with no plan B
No one can predict when they will lose their well–paying job, but life happens. On the other hand, not many people have a constant saving platform. This means they do not have a plan B in case they lost their jobs. The result is decreased income and eventually getting themselves into debt.
#2 Health and medical expenses
How many people have insurance for medical expenses? Very few. To a majority, it is not a priority. Surprisingly, they will even skip doctor appointments for a general checkup. They might find that they have substantial medical bills which they cannot pay, and they realize that they would have done better with obtaining medical insurance. But the truth of the matter is that medical insurance is a savior in many households and can help you when you are in need of certain products. If you are in need of a variety of medical or surgical supplies, you might find that an online company sells their products at a much better price than the store down the road.
#3 Marital issues
A lot of relationship issues stem from financial problems. Statistics show that four in every ten marriages in the USA end in divorce as a result of a financial crisis. At this point, your financial plan as a couple is essential.
#4 Lack of a budget
Most people do not have budgeting skills and their life is full of trial and error. Their money habits are a vicious cycle and they will always find themselves in unfamiliar territory. Having a realistic budget and learning the basics of money management is an excellent way of averting troubles related to finances.
Surprisingly, in the current day and age, young people and students are the primary victims of financial struggles. Personal finance tips for young people who don’t want to be poor for life advises them to live simply, pay student loans on time, and to begin saving early.
Are you entertaining too many spendthrifts in your life?
There is a need to identify the spendthrifts in your life. These could be friends within your social circle, and though it may sound harsh, it is a necessary move. You will be surprised that people who spend their money having fun instead of saving for the future surround you more.
Forbes digresses further on the need for an emergency fund. This is one of the financial areas that many people are not willing to commit to. Perhaps out of ignorance or they do not understand its purpose. “Life is full of surprises,” according to CFP and Founder of Panoramic Financial Advice, Andrew McFadden. Hence, you will be in a haven with liquid cash stashed away which you can easily access. Besides, who wants to be caught up a stream without a paddle when emergencies occur? How many people want to use credit cards in situations when it is obvious that a credit card is an additional expense?
You can also consider having multiple sources of income; meaning that if you are in a full-time job, you can also create a side business. If you are in business, consider having passive income sources such as being an investor in other small businesses. However, neither the economy nor the job market is stable. Thus, it is essential to have a positive mindset.