There are a number of financial challenges that consumers must take on this year as they try to take on money management to the next level. It can be part of their new year’s resolution to try and do a better job with their money than last year. They might want to increase their income or at least lower down their debts to make their budget a little more manageable.
It might be hard to understand but there are actually benefits from financial challenges that comes into the lives of people. But that doesn’t mean that you get to be comfortable with the situation rather, you just try to make the best of the cards you are dealt with. You choose to see the brighter side of life rather than succumb to all the challenges it brings.
Financial management is harder than it looks because it is more than just putting in numbers on an excel file or whatever budgeting program you are using. The numbers that come into the income part has to be earned through hard work. Although there are ways to make your money earn for you down the road, this still needs some funds to work.
The expenses also needs to be monitored closely to help manage the budget. There are a lot of foolish ways to spend money especially those you have to pay for high interest rates on the loan. To prove this, Nerdwallet.com shares that the average amount a household pays for interest alone for a full year is about $6,658. Imagine what this can amount of money can do to help secure a more solid financial future.
Financial challenges to overcome
If you are facing financial hardships at the start of the year or you just want to start off on the right foot, here are a few things you need to look into to help you set off to a great start for the year. These are not the only ones you need to focus on but they are great starting points.
- Being too comfortable with debt. Debt has become a constant, and at times necessary companion for people to reach their financial dreams in life. For those dreaming of owning their own home in the future, they would toy with the idea of having to take out a mortgage loan from the bank. The same goes with people who find the need to buy a car because one of the quickest ways to get one is to take out a car loan. The same for student loans where people put their future earnings on the line just to get a decent job but tie themselves to decades of repayment. Debt can be used as a tool but you should never be comfortable with it. Find ways to free yourself and live a debt free life.
- Not being serious with reserve funds. No one can predict the future and you will never be able to plot out the amount you need for future expenses. The best thing you can do is to prepare and plan for more than what you need. One thing that can help you are your reserve funds which would have your emergency fund as well as a rainy day fund in it. These two are used to help counter the sudden need for funds from unexpected financial needs. You need to set aside an amount that you can quickly pull out when the need arises.
- Retirement planning is non-existent. There are a lot of long term goals you can draw up but one of the most important goals would be to save up for retirement. You have to learn to accept that there will come a time where you will be unable to work with the same health and intensity just like the first time you started. The sooner you get to plan for retirement, the sooner you can make it happen.
- Putting immediate future plans on hold. You might be looking to settle down in a few years or start a business to increase your income but you seem to be putting them off further away as you go along. Start making concrete plans and commit to a date to make them happen. You can look at them as an integral part of your long term goals so you get more drive to pursue these plans.
- Enjoying a dead-end job. According to Conference-board.org, there are only 48.3% of the working class that actually enjoys their work according to their latest survey for 2015. This leaves over half of the workforce unsatisfied with their current employment. The problem is that some people tend to wait it out and prefer to stay employed in something they do not want rather than explore for something they want. You need to gather up the courage to go after what you want. You do not have to let go of your job while looking for something that you like. You can go ahead and explore while holding on to your current work.
Dealing with debt payments
Another thing you want to do is to lower down your debts at the start of the year. Here are a few things you can consider when you are ready to gear up with your financial status in life.
- Tally up what you owe. You need to know how much you owe to be able to put a plan together to repay your debt. You must be able to know the amount so you would have an idea where to get the funds to pay for them. A simple list would do and it might help to know what the interest rates are as well.
- Locate the source of the problem. Bankrate.com shares some of the most common causes of debt but you need to do your own assessent and see where the problem is. More than just the amount, you need to dig deeper and try to understand why you are in debt. Are your student loans to be blamed or your frequent shopping trips every time you get your pay? Do you have a gambling problem or is is simply a matter of income not measuring up to your expenses? You need to see why you are getting in debt so you can treat the main cause of the problem.
- Consider debt consolidation. Debt consolidations is a great way to manage your debt payments a little better. It helps you combine most or sometimes all your debt under one account. This lets you deal with just one set of details from payment amount to interest rate even to payment date.
Financial problems are a big part of any consumer’s financial journey in life. Regardless how much you plan and prepare for the future, you will always be thrown a curveball and what happens after that will depend largely on how you prepared for those unexpected events. You can succumb to it and fall flat on your face or you can triumph through it and come out a better financial planner.
You will deal with various types of financial challenges in your life and the best part is to use them as important life lessons. You might have heard about them from your friends, seen it in movies or read about them in the news but experiencing them for yourself is a different thing altogether. Learn from them and use them to make you a stronger person.