So many Americans are trapped in debt and underfunded for retirement that one has to ask, “What’s going on? Why do so many of us have such financial problems?
Here it is: Our 2022 Small Business Spotlight
Discover: 7 Surprisingly Easy Ways to Reach Your Retirement Goals
Much of it is not our fault and out of our control, but we need to get to the root of the money problems we have. box control. It is therefore important to understand the causes of financial problems. What are they and how do they manifest? More importantly, how can we solve them?
Let’s try to understand.
Financial literacy is sorely lacking in our society and causes big problems in our financial life.
“Remaining in the dark about certain financial factors will eventually put you at risk of countless financial problems,” said Clint Proctor, editor-in-chief of Addicted to investors.
It may not be your fault that you lack financial literacy, but it is your responsibility to fix it. You might want to hire a financial adviser for intensive one-on-one help, but you can also check out a growing list of books and podcasts to learn more.
Have a negative mindset
Seeing the world through rose-colored glasses won’t just guide you to financial success, but the inverted mindset can downright hurt you.
“Behind many common financial problems is a crippling financial mindset,” said Kelley Holland, a financial empowerment coach. “It can manifest as negative self-talk, like, ‘I’m hopeless with money’ or ‘I can never retire.’ It can also come across as avoidance: not opening incoming bills, not tracking expenses, or missing payment deadlines.”
There are several ways to combat a negative mindset when it comes to money, including challenging your beliefs and acknowledging your own strengths and past accomplishments.
“Consider if your belief is accurate — or if you really have strengths or experiences you can draw on to take charge of your finances,” Holland said. “For example, if you were successful in adopting a fitness program, you can think about the reminders and motivations you used to get there.”
Take part in our survey: do you think you can retire at 65?
Receiving bad advice from so-called “experts”
“Our current marketing landscape makes it difficult for people to get reliable financial help,” said Josh Richner, marketing coordinator for National Legal Center. “Ad platforms are creating new ways to target populations with aggressive ads, but the information isn’t always transparent or accurate. The more profitable the service, the more companies can afford to market it. It’s a trap when we work with people in difficulty.
To remedy this problem, Richner recommends that before making any major financial decision, you consult with a nonprofit credit counseling agency, a law firm familiar with ways to avoid bankruptcy, and/or a counselor. credible financial.
“The key is to get multiple perspectives so you can make an informed decision that’s best for your unique financial situation,” Richner said.
Financing the lives of your adult children
“Parents of Helicopters [and] demanding children have created a generation of offspring who are not financially independent of their parents,” said Kathleen Owens, financial advisor at Aurora Financial Planning. “It’s a very important societal problem.”
To solve this problem in your own life, put your generosity in check and set limits with your children to end the vicious cycle.
“I’ve seen a lot of people in financial hot water over the years, and I’ve seen a variety of different root causes for their problems, but by far the most common root cause of financial problems in my opinion. experience is addiction,” said Ziga Breznik. , Owner and Head of Research at International public finance.
“Of course drug addiction and gambling are some of the most financially debilitating, but that also applies to alcohol and even things like smoking. You’d be surprised how much debt a chain smoker can rack up. when it’s 40 a day. I’ve dealt with people who spent over $15,000 a year on cigarettes, and the worst part was, they were so addicted they didn’t even realize to how much they were sending money up in smoke.
The solution to this problem? Ask for help to quit smoking!
“A very common problem is when people are afraid to deal with their finances,” said Alex Caswell, wealth planner at HRH Financial. “This leads to problems such as lack of savings, debt, loss of investment opportunities and an overall unhealthy and stressful relationship with money. They choose not to look at their bank statements, choose not to fail to assess how much they are spending and avoid making important decisions about their money for fear of what they will find out.
Dissolve your fear by taking small steps to manage your financial life.
“Simple things like reviewing your bank statement once a month can lead to budgeting,” Caswell said. “Start small and focus on building a good habit, then go deeper. Don’t be hard on yourself in the process. Understand that it won’t work right away, but given enough time and concentration, it will get better.
More from GOBankingRates