The best way to solve a problem is to understand what got you into trouble in the first place.
It always surprises me when I talk to people about their money problems and they can’t really tell me how they ended up the way they did.
I’ve never met anyone who deliberately placed him or herself in financial difficulty.
What this makes me think is, ‘ If nobody wants to have money difficulties but most people do have them, then surely there must be something missing in what we are taught at school or in our up-bringing. It can’t possibly be that we’re all stupid!’
If you know what causes a problem then you have a much better chance of getting out of trouble.
For example…
I imagine that a scientist who knows why cancer begins to form in someone’s body has got a much better chance of finding out how to stop it from occurring than a scientist who does not. The same is true for what I like to call “money cancer”.
Here are the ‘20 Most Common Reasons’ why people have money problems.
- Accepting financial advice from a “friend”
- Acting on an impulse without getting all of the facts
- Bad habits – e.g. drug, cigarette and alcohol abuse
- Borrowing for things that lose value
- Confusing “short term pleasure” with “long term satisfaction”
- Consistently spending all or more than you earn
- “Everyone else has got one” mentality
- Failure to plan beyond today
- Failure to realise the best things in life are free
- False justification – e.g. buying a new car to save fuel when it might take 10 yrs to recover the cost
- “I deserve it mentality” – self centred living
- Image (“Cool” and “Fool” rhyme for a reason)
- Lack of perseverance
- Making decisions based on emotions
- “Must have it now” mentality – can’t wait till it’s affordable
- Refinancing multiple credit card debts and then still using the cards!
- Using income to buy “toys” rather than investments
- Victim of clever marketing campaigns
- Victim of “easy finance” arrangements
- “You only live once” mentality
Basically 2 categories
If you think about the 20 reasons, you can see they fall into only two categories.
- Lack of Information
- Lack of Self Discipline
Interestingly, if you were to ask a number of people what causes their money problems it’s likely they would say it was a lack of income, i.e. their boss doesn’t pay them enough money for the work they do!
Without a doubt, maximising your earnings is an important part of reducing money troubles, but unfortunately it is easier to spend money than it is to earn it so you also need to focus on how to make the most of what you do earn .
Think about this. Surely there are people who earn less than you do! If you are struggling with money, how are they surviving? If you’re doing it tough, they must be going bankrupt! But many of these people are doing quite well! It’s also a sure thing that there are also people out there who earn more than you do, who are doing worse than you!
We’ve already identified lack of self-discipline as a factor causing money trouble. That is spending money when you know you shouldn’t but doing it anyway! Of course this raises the question, “How do you know when you should or shouldn’t spend money”? Do you rely on feelings? e.g. I feel like I’ve spent enough money for one day!
Or, do you stop spending when the savings account is empty, or perhaps when the credit card is full? It probably seems like a silly question to ask at first glance. Isn’t it obvious? Of course people know when they can or can’t spend money.
I’ll leave you to think that one over. How do you know for sure when you can afford that little bargain you found at the supermarket? How do you know for sure you should pass it by?
Home Budget Buddy is all about this very question, and the answers it gives make so much sense, you’ll find it gives you new confidence in managing your money. Not only that, you’ll find you can minimise the burden bills place on your income when you use the Home Budget Buddy software system.
Until then
… to your bright and happy future.
Diane Hamilton
HomeBudgetBuddy
P.S. Feel free to pass onto your friends
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