A lot of people constantly bicker about their financial situation.
They end up asking for advice from financial experts about how to deal with their debts and how to avoid them in the future.
To be able to fight an enemy, it is crucial to know what you are fighting in the first place.
Therefore, it is important to define the very things that cause debt and financial distress in the first place - A Reduced Income More often than not, people delay bringing their expenses in line with their decreased income.
There is a host of good reasons that you can come up with to justify your debt yet the sooner that you adjust to your new reality, the better it will be for you.
Under this category is underemployment.
If you are experiencing this as a temporary thing or if you just came off of unemployment, then you could feel some sort of relief.
While you do deserve a break, being underemployed is not the right time to relax.
This is the perfect time to get your financial affairs in order, perhaps get a second job, and then start slashing off unnecessary expenses.
Living with a Single Income Imagine having to support a kid (or kids) on a single income! It is hard enough for couples to provide for a family, how much more for a single mom? This is also true for the young professionals out there who are out to support their parents.
Poor Money Management It is vital to come up with a monthly budget plan.
Without this, you will never have any control over your money.
You could already be spending thousands each month and yet still be unaware of it.
Planning is as easy as sitting down and writing down your income as opposed to your expenses - these two must be reconciled.
You will feel much more powerful once you make careful decisions about when and where to spend your hard-earned money.
Unexpected Medical Expenses People tend to worry about these only when the illness strikes - and this is truly tragic.
The medical industry requires payment as soon as they have rendered service because they know that the longer they go unpaid, the less likely it is that they can collect on payments.
Sure, you can rely on your credit cards for now but you have just incurred debt which you need to pay with high interest.
Having Too Little or Zero Savings One of the simplest ways to avoid unwanted debt is being prepared for unexpected expenses.
The ideal thing to do is to save 3-6 months worth of living expenses.
This is just a meager cushion for those sudden expenditures such as a job layoff, an illness, or death in the family.
Saving money is the ultimate way to pay yourself first.
Make a habit out of this and you will soon see your money grow.
Also, you will have money to spend when you are in dire need.
Inability to Communicate About Money It is important for couples to communicate about their finances.
The children must also be a part of this financial discussion so that they know what is going on in your family's finances and they would be able to behave accordingly.
Discuss your spending style as well as financial goals with the whole family.
If you happen to be a saver and you were yoked with a spender, then this is the time to strategize and compromise.
Know the credit accounts for each spouse then agree to be honest in buying using these cards.
Spending Money That You Don't Have If you have yet to earn some money and you have already promised this amount to pay for a debt, then you are counting your chickens while the eggs are yet to hatch.
That job bonus or inheritance money may or may not come - so spend only the money that you already have in your hands.
Financial Illiteracy About 90% of people do not understand how money actually works and how it can grow.
They also have no idea about where to invest their money or how to save for the rainy days.
Let's face it, schools do not teach about financial literacy - at least not a lot.
And you are truly blessed if your parents even discussed the issue with you.
In essence, you and you alone are responsible for the mistakes - and successes - that you will have about money.
So it's time to take charge by getting in touch with a financial expert soon.
Educate yourself about wealth management so that you can finally be financially free.