Dealing with financial problems is never fun. But unfortunately, most all of us have to do it at one time or another during our lives. Fortunately, when your family is in a financial bind, there is always a way to resolve the problem. In today’s article I’ll cover 9 of the most common financial problems families face, along with some practical advice for overcoming your financial problems so you can win with money for the rest of your life.
9 of the Most Common Financial Problems
Here’s a quick list of the most common financial issues families face on a daily basis:
- Not enough income
- Financially disorganization
- Lack of savings
- Too much debt
- Job loss
- Huge health care costs
- Not on the same page as your spouse
- Not knowing how to invest
- Overall financial stress
Not Enough Income
One of the most common financial problems my readers tell me they experience is a lack of income. It’s an issue a lot of people have, but they’re not sure how they ended up that way, or how to address it.
Make a Plan for Your Career
When it comes to dealing with a low income, I believe many times it’s the result of lack of a plan. I talk to so many people who struggle with their income, but they have no plan for their career. They just continue working, hoping to find the next job that pays two more dollars an hour.
That’s not a plan.
Making a real career plan means looking out 5, 10, 20 years and envisioning where you want to be career-wise at those times. Once you have a clear vision, write it on paper and start writing down what steps it will take to get you to each point in your vision for the future.
You may not be able to formulate the perfect career plan in the beginning. But the point is to start taking the small steps necessary to get you to the next level financially and in your career. As time goes on, the next steps will become clearer, and you will continue moving forward.
Get a Side Hustle
Another great way to increase your income is to get a good side hustle. The great thing about a side hustle is that it can really take the pressure off financially.
You can use the extra side gig money for anything you need to. For example:
- Paying off debt
- Family enjoyment
- Reinvesting into your side hustle to turn it into a full-time business
Side hustles are a great way to ease the financial stress in your life. But one thing a side hustle won’t do is overcome financial disorganization. If you are not managing your finances well, it doesn’t matter how much you make, you still won’t get ahead financially.
Here are a few of my most popular posts about side hustles:
You Are Financially Disorganized
As I mentioned above, financial disorganization always causes you to struggle with money problems, even if you have a high income. I believe learning to manage your money better is the number one thing you must do if you want to overcome your family’s financial problems.
Just knowing your bank account balance at any given time does not mean your financially organized. Knowing how much your bills are every month isn’t either. This is not the best way to manage your money.
When it comes down to it, the best way to organize your finances is to do a monthly written plan that tells your money where to go, instead of wondering where your money went at the end of the month.
How to Get Your Finances Organized
So, how do you get your finances organized? Here are some examples of what you’ll need to do:
- Evaluate your expenses- do you spend more than you make?
- Know how much debt you have.
- Make a plan for paying off debt.
- Build an emergency fund.
- Start doing a written, forward looking monthly budget.
- Learn to pay yourself first.
- Ditch the credit cards. Start using only cash, checks, and debit cards.
If getting your finances organized seems too overwhelming, there is help! I’ve put together a highly rated course that takes you through every single step you need to get on the right track.
It’s full of detailed written lessons, videos, and printable worksheets that will take you through the process, get your money totally organized, and eventually make you feel like a financial genius! You can check it out at the link below.
Lack of savings
So many people are living paycheck to paycheck, that few save as much money as they would like. Unfortunately, lack of savings takes a toll on your finances now and for the future, not allowing you to build the financial freedom you want for you and your family.
For some, not saving money is related to having a low income. But for a huge swath of the population, it’s due to a lack of good money management habits.
Saving for an Emergency Fund
To protect yourself from getting into debt when you have an emergency expense, it’s extremely important that you build an emergency fund as your first line of defense.
A small $1,000 emergency fund is sufficient once you pay down your consumer debt. Then you can quickly build an emergency fund of 3-6 months of expenses to insure yourself against a major financial hit, such as a job loss or a worldwide pandemic.
Saving for Retirement
Retirement saving is crucial if you ever want to have financial freedom in your future. Even if you have to sacrifice, put 15% of your paycheck into retirement accounts. Have it automatically deducted so you don’t have to do it yourself every month and be tempted to spend it somewhere else.
Saving for a Home
If your goal is to own a home, saving up for a down payment can be hard. But if you get your finances organized like a talked about above, you can be a homeowner in no time!
Your best bet is to save up at least a 20% down payment so you can gain instant equity and avoid private mortgage insurance, which is a huge waste of money.
How Can You Save More Money?
I realize all the goals above seem insurmountable to some people. But if you make the commitment to changing how you approach your finances, you’ll be totally surprised at how much money you can save!
Of course, a side gig and a good plan to better your career can be a huge help as well.
You Have Too Much Debt
Consumer debt is the #1 killer of family finances! We’ve become so addicted to the notion that credit card bills and car payments are just a part of life, that many don’t believe there is an alternative.
I can tell you from personal experience that getting out of debt is absolutely the best thing you can do to rid yourself of financial problems forever.
When you fix the financial problems associated with consumer debt, you have the freedom to make better financial choices for your family, you have less financial stress in your life, and you can build incredible, life-changing wealth!
You Lost Your Job
Losing your job can be a crushing blow- not only to your ego, but for your finances as well. Even if losing your job isn’t directly your fault, it can be difficult to recover if you’re not prepared.
The first thing you should do when you lose your job is to take a deep breath. Let your emotions take a back seat for a minute, and evaluate where you stand, as that will help determine your path forward. Some important questions to ask yourself when you lose your job:
- Will I get a severance package?
- Do I have an emergency fund ready and waiting for a time like this?
- Which contacts can I call that can help me find a new job?
- Do I need to learn any new skills to make myself more employable?
- What can I do right now to start the process of finding my next job?
Overcoming Job Loss
Overcoming this common financial issue sometimes takes a while. You should be prepared to hit the ground running, especially if you don’t have a severance package or emergency fund in place.
The best solution is to get active. No sulking or hunkering down in a semi-depressed state for days on end. Here are some action steps you can take when you lose your job:
- Lean in to contacting people who can help find your next job.
- While you have time off, learn a new skill to help increase your value to your next employer.
- Review and update your social media profiles.
- Review and update your resume’.
- Get a part-time work to make ends meet while you search for a new job.
- Don’t rely on credit cards, and never take money out of retirement accounts while unemployed.
Remember, losing your job may be a blessing in disguise. It may not feel like it at first, but when you take quick action, you just might find your dream job!
Huge Health Care Costs
High medical bills are one of the most common financial problems people face. Whether it’s due to a hospital stay or high insurance premiums, it’s difficult to deal with the financial problems associated with health care.
The Cost of Health Insurance
Health insurance premiums take a huge chunk of your money every month, especially if your employer isn’t covering part of the bill. It’s not always easy to reduce these costs, but there are some things you can do to decrease your monthly health insurance costs:
- Try the Affordable Care Act Marketplace to find a more affordable plan.
- Increase your deductible, which will decrease your monthly premiums.
- Use a more affordable Christian healthcare ministry instead of traditional insurance. My favorite is Medishare.
Another common financial issue is high medical bills. Whether you have a chronic illness, had an accident, or had unexpected surgery, the costs add up fast.
Fortunately, there are ways to minimize these bills if you know what to do. In some cases, you can end up paying pennies on the dollar! I wrote an article about how to pay off your medical debt that shows you what you need to know.
Not on the Same Page with Your Spouse
Studies show that money issues are one of the top causes of divorce in the U.S. It has little to do with income level, and everything to do with how the couple manages money.
Unfortunately, most individuals don’t view or use money the same way as their spouse, and this causes friction. When they don’t make the effort to learn how to work together financially, it’s easy to let finances become a wedge in the relationship. This can lead to an expensive divorce.
But, even you don’t see eye-to-eye financially with your spouse, you can still find a way to work together without causing friction in your relationship. I can honestly say that when my wife Angie and I finally learned to communicate effectively and got on the same page with our money, it changed our marriage in a huge way. We literally have not had a money fight in over a dozen years!
My latest online course will help you achieve the same results. It will teach you to:
- Understand money better.
- Get control of how money flows in and out of your life.
- Develop the right habits to succeed financially.
- Get on the same page with your spouse about finances.
- Fix your money problems for good.
Not Knowing How to Invest
Another common financial problem so many contend with is not knowing how to invest money wisely. In discussions with many of my readers, I’ve discovered that most tend to put it off, if they ever invest at all.
They feel like they don’t understand investing, and lack the confidence to do it. They are afraid to put money into investments they don’t understand, and potentially lose their hard-earned money.
Fortunately, you don’t have to be a Wall Street genius to invest your money wisely. Yes, you should be educated about investing. But when it comes down to it, when you understand a few basics about investing money, you will easily overcome this common financial issue.
Here’s an example of some of the basics of investing you need to know:
- Don’t use debt to invest.
- Don’t take on too much risk.
- Be conservative, but not too conservative.
- Spread your investments among several different asset classes.
- Keep your emotions in check- don’t jump in and out of investments when they go up or down.
- Avoid individual stocks- stick with mutual funds, ETF’s, and index funds.
- Avoid taxes and fees like the plague.
- Hire a financial advisor if you need one.
Below you’ll find some of my top posts on investing:
Overall Financial Stress
Probably the most common financial problem most of us face is financial stress. The simple definition of Financial Stress is constant fear, worry, and anxiety about finances. Stress about your finances is one of the main contributors to overall stress and anxiety in most people’s lives.
Financial stress can even cause physical symptoms such as:
- Loss of sleep
- Increase anxiety
- General irritability
- Stress eating
- Clenching/grinding your teeth
- Heart palpitations
How to Eliminate Financial Stress
Obviously, the more you can do to fix your financial problems, the less stress you’ll have. I can tell you from personal experience that dealing with your financial problems decreases your stress level tremendously! Getting your finances straight is absolutely worth the time and effort, especially when it means eliminating a huge source of stress in your life.
So how do you start eliminating financial stress? Here are some things you can do:
- Take inventory- know where you stand financially so you can make a forward-looking plan to do better with money.
- Do a monthly written budget.
- Ditch the credit cards and adopt a cash only lifestyle.
- Get out of debt.
- Get on the same page with your spouse about money.
- Understand that financial problems don’t last forever, as long as you decide to do something about them.
Fix Your Financial Problems for Good
Fixing your financial problems may seem like a daunting task. But no matter what your financial situation is, you can make it better.
You may not be able to make it happen overnight. But when you make a plan to eliminate your financial problems for good, you can manage your money better and get the job done, usually in less time than you think.
So, whatever financial problems you face, get moving, take action, and you can solve your financial problems for good!