Main causes of financial problems
8 Causes of financial failure
Struggling financially? A lot of people are even though they give everyone the impression that they have it all done. They work, they live in a nice house, and they drive a nice car, but they live from payday to payday. Here are 8 main causes of poverty in the first world.
Living beyond your means
There is no escape. If you spend more money than you earn, then you must get your extra money from somewhere and that almost always means borrowing money, also called buying on credit. All this has a cost and is called interest. If you’re in the habit of buying things on credit, the interest you’ll pay over your lifetime will add up to a fortune. Interest is sometimes called dead money because you have nothing to show for all the interest you are paying.
Think about what you could have spent with all that interest. It’s almost too painful to even think about it, but if you want to avoid poverty then you need to get your head out of the sand and face the facts; your financial future depends on it.
Keep up with the neighbors
Some people try to keep up with their peers on whatever they are spending their money on. It is a compulsion that will cost you dearly. Living up to some kind of self-image will seriously damage your finances and be costly by the time you stop working. You may think that your peers are doing well financially to pay for these things or even think that they have done well, but what you don’t know may surprise you. That they may be up to their necks in debt. Even if they live within their means to finance their lifestyle, it doesn’t mean you have to keep up with them.
Don’t be a people pleaser and live according to other people’s expectations, live according to what is the correct course of action for your own circumstances and you will be much happier.
consumer debt
Consumer debt, or silly debt as it’s often called, is buying things with borrowed money. It is spending tomorrow’s income today. Debtors generally don’t realize what happens to the so-called things they bought on credit; that their newly acquired possessions are worth less at the time they have been purchased. A crucial factor to be observed is this; The money owed on the item is always more than the item is worth. No one, so many people are trapped in the debt-poverty cycle and it’s not just those with the lowest incomes; in fact, people with average incomes are prone to this trap.
commercial greed
Commercialism during the 20th century has brought much prosperity; it has provided jobs and created countless businesses, but it has another side. First world poverty that is caused by an insatiable appetite for things. People are not content with the things they need, but keep wanting more. All of this has to be paid for, it is money that could have been used to build a financial foundation for your future.
addictions
Addictions are very expensive; just ask any smoker. It doesn’t take a mathematician to calculate how much cigarette smokers pay for their addictions. It is estimated at over $100 NZ per week. That equates to five thousand per year and fifty thousand per decade. No wonder so many smokers are broke. It is the same with those who are addicted to alcohol and slot machines.
financial illiteracy
Financial illiteracy is the main cause of financial poverty and it is not just low-income people who are financially illiterate; people with high incomes can also be guilty of this. You hear stories of successful athletes who made millions during their heyday but are broke years after they retire. It’s important to save and invest your money during your best earning years to prepare for when you won’t earn as much anymore.
Irresponsibility
Not taking responsibility for your own finances is irresponsible. They will come up with all sorts of excuses why they haven’t joined kiwisaver or aren’t contributing. Excuses like: “You can’t take it all with you,” “I might die before I retire,” or “I’m only young.” People who are irresponsible with their finances tend to be irresponsible in other areas of their lives as well. Making commitments, whether it’s in a relationship, owning a home or car, or saving for retirement, comes with responsibility, and that’s what separates the men from the boys.
bad Company
There is no doubt that bad company is one of the main reasons why so many people live in poverty. It’s been said, “You’re the average of the five people you spend most of your time with,” so it’s worth examining who you hang out with and asking if their attitudes and opinions about finances are influencing your habits. financial. To grow you need people to help you and encourage you. This sometimes means parting with bad company. Some find it difficult, but in the long run it is worth it.