6 things that increase your risk of having financial problems

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Have you ever wondered if there is some kind of crystal ball that could determine whether you will end up being financially secure or running off paying debts with next month’s paycheck for the rest of your life? There aren’t any, but economic studies have found that there are a few risk factors, some more obvious than others, that could increase your likelihood of having a problem at some point in your future. And by “problem” I don’t mean just having debt; if it was the baseline, every American who has ever taken out a student loan would have a problem. were define money problems such as being unable to pay bills at least once, having to pay necessities on credit and/or being sued by creditors – the signs of really serious financial problemsin other words.

Some financial hardship risk factors are more obvious than others. Addictions of all kinds are synonymous with trouble, but others are more complicated; mental illness and debt, for example, form a vicious circle where they can feed each other, and innocent things like having children or trying to live in the moment can indicate that you are more vulnerable to financial difficulties. (Yes, fleeting things like your feelings do matter.)

Here are six potential indicators of financial difficulties in the future, according to economic studies. From excessive gambling to an attitude problem, they can all indicate problems unless handled properly.

1. You smoke a lot of weed

A study published in Clinical Psychological Sciences in March revealed one of the biggest clues yet between heavy cannabis use and financial hardship in life. This was a long-term study, followed by more than 1,000 children in New Zealand from birth to age 38, and researchers found that members of the cohort who became large weed eaters (more than four times a week, not just the occasional joint). ) ended up in lower-paying jobs, had worse credit scores, and carried more debt than those who didn’t.

One of the researchers stated in a press release, “Our study found that regular cannabis users experienced downward social mobility and more financial problems such as debt and cash flow problems than those who did not report such persistent use.” It is a relation rather than a cause, but there is certainly a link between the two, according to this particular study.

2. You have mental health issues

According to Mind, a UK mental health charity, the relationship between mental health difficulties and debt is vicious, circular and negative. This did a study of 1,804 people with mental health issues ranging from mild depression to schizophrenia, and their experiences of financial hardship. The results are quite alarming: 70% of respondents were unable to pay a bill at last notice, 51% were contacted by bailiffs and 56% were left without food due to a cash flow problem.

Mental health issues make people more vulnerable to money problems by disrupting regular work and payment schedules, making it difficult to find a job, creating unforeseen expenses and generally rocking the boat of any financially secure life. (Some of these behaviors are very specific; people the manic phase of bipolar I disorder, for example, may continue to spend lavishly.) And stress and financial difficulties often only worsen mental conditions. The relationship is well understood by mental health charities; organizations like Rethink Mental Illness actually provide help write off debt and understand welfare and hospitalization expenses.

3. You or your family drink heavily and struggle with addiction

Addiction is the enemy of financial stability and expense tracking. And if there are serious drug or alcohol problems in your family, the likelihood of financial difficulties increases. A Forbes Dependency Issues article reports that dependencies are dangerously cumulative, as people get higher and higher doses and spend more and more money on their pleasure. A pack of cigarettes or a bottle of wine will not provide the same hit, so addicts will increase their “hit” and spend more money in the process; this is how habits become very hard on the wallet.

But even non-addicts are likely to run into trouble if they regularly abuse it; a 2009 study showed that there were a relationship between heavy drinking and higher credit card debt among American college students.

4. You have a casual attitude towards money

A an interesting Dutch study came out in 2012; a group of researchers became alarmed that in 2011 almost 50% of all dutch households could not pay a bill on time or had financial problems, and they wanted to know why. What were the risk factors that indicated a household might get into trouble?

One of the key factors discovered by the Dutch researchers was that a particular attitude towards money seemed to be linked to financial problems. The attitude had three components: a refusal to save money, a propensity to be easily “tempted” to buy or do things, and a “short-term” outlook that does not focus on to come up. Basically, if people didn’t put anything aside for a rainy day and were tempted to splash all their money on that awesome shiny thing they saw in a store window, they were much more likely to end up in debt or to have problems with bills than people who were more, well, boring about money.

This study and another by the Money Wise platform in 2014 also found that people who were more financially literate (i.e. people who know what all the financial terms mean and how to handle things like debt) and more “involved” in their day-to-day finances were less likely to have difficulty. So getting educated and stopping a “hey, someday” attitude to your finances seems like a good way to avoid future problems.

5. You are a gamer

Not surprisingly, 44% of all compulsive gamblers have serious and recurring money problems, according to a 2012 study by British researchers. “The relationship between money and gambling is complex,” the researchers wrote. “Money is not only the agent through which gambling is accessed, but also a key motivator for engagement, a potential outcome or reward, and, for some, a marker that the behavior has become excessive or uncontrolled. .” It’s not that all players find themselves in financial difficulty; it’s more than a serious gambling problem leads to financial instability, the potential for theft and fraudthe reliance on borrowed money, and the disappearance of in-game cash flow. We’re not talking about an occasional idle blackjack game here.

Thirty-eight percent of all serious problem gamblers surveyed by the researchers had very bad debt, and their range of debt was enormous, from banks to small private loans. Much of the practical support for addicted gamers actually involves structure their money in a way that makes it really hard for them to get it and spend it.

6. You have children

If you plan to have children, keep this in mind: the risk of having debt problems increases by more than 50% once you have a child, and is especially high if you have three or more, according to the Money Advice Service. Nineteen percent of all adults with one or more children have debt, but it rises to 26% in households with three or more children.

The main problem, of course, is that children are really, really expensive; raising a child born in 2013 to age 18 will cost the average American couple $245,000, although this changes a lot depending on where and how you live. Daycare is a huge expense, on average at about $11,666 per year, according to the National Association Of Childcare Resources & Referral Agencies, while Money Aware reported that two-thirds of all queries they received in 2015 came from parents in panic and debt. Baby planning shouldn’t be limited to cribs; you also need to have serious financial discussions about whether you can afford the small rugrats in the first place.

Images: Pexels; Giphy

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