FIVE SOLUTIONS TO FINANCIAL PROBLEMS FAMILIES FACE
INTRODUCTIONS:
Personal Finance, (2021)
writes that whether you make a lot of money or a little or have massive amounts
of credit card debt or none, more than likely, finances are an issue in most
households. Financial problems are common and
include difficult issues like not having enough money, losing a job and
conflicting financial values. In my little family of four, money is a topic of
conversation between my husband and I on a daily — yes, daily — basis.
We regularly discuss our monthly budget, upcoming
expenses for the week and how we’re reaching our savings goals. For us, money
is a continuous and evolving topic. So, whether you’re on top of things
financially or still have a way to go, financial issues are inevitable and most
important, shouldn’t be ignored.
Let’s take a look at the top five money obstacles
families are likely to face and help provide some solutions you can put into
action today. Personal Finance, (2021)
Issue No. 1: Not Enough Income
Each year, lack of money and too much debt are
their biggest financial challenges. Adding to that stress, about 25 percent of
families rely on just one source of income, which can make it feel impossible
to save money, reduce debt and increase your net worth.
Solution: Embrace a Tough Reality Check If you’re making too little money, the solution, though
painful to hear, is simple — eliminate expenses and/or increase your monthly
income. Find ways to eliminate unnecessary expenses: minimize dining out, cut
your cable package and cancel that pricey gym membership. Take a long, honest
look at what your net income really is each month and where that money goes. A
part-time job, though not ideal, may be necessary in order to get your finances
where you want them to be.
Issue No. 2: Too Much Debt
The average hold credit card debt is over $15,000.
The average mortgage debt is $150,000, and student loan debt just over $30,000
for instance. Debt is no fun and can be crippling for households.
Solution: Make Debt Reduction a Serious Priority Each month; you probably have very little left over after
all your expenses are paid. And while mortgage and student loan debt can often
take years to eliminate, pesky credit card debt shouldn’t be a major thorn in
your financial life.
If you are caught in the web of credit card debt, the
first step is to stop using them —for good. Take a look at your monthly budget
and see what expenses you can realistically live without. Try to bring in extra
income earmarked solely for credit card debt. Start with the credit card that
has the highest balance and slowly make it a priority to work your way out of
the hole. Yes, it will take time. Yes, it will be hard. But in the end, the
relief you will feel from manageable balances will be more than worth it.
Once your credit card debt is paid off, avoid the
temptation of racking up another round of purchases. Make it a habit to save
before spending.
Issue No. 3: Job Loss
One in three Americans have anxiety over losing their
job. Even people with seemingly secure jobs have seen them come to an end. Job
loss is usually shocking and traumatic, especially when household budgets
depend on two incomes.
Solution: Have a Plan in Place if you or your spouse were to lose a job, what would you
do? If you’re not sure, the first place to start is with an open conversation
with your partner, discuss your family’s options. For example, my husband is
the breadwinner in our home. And while he used to be self-employed, he now
works for an employer.
Our plan, should he lose his job, centers on his self-employment
income opportunities to hold us through the interim period between his old and
new job. It’s also important to make sure that you do your best to save as much
as possible, especially if job security is uncertain.
Issue No. 4: Staggering
Health Care Costs
Individual insurance premiums average just over $300 per month under the recently
passed Affordable Care Act. Families, of course, should expect to pay much
more. No doubt, health care is an expensive necessity.
Solution: See Health Insurance as Mandatory Expense Health insurance is no longer an option, and ironically,
having health insurance provides a huge sense of financial security for
families. The cost of treatment for even minor illnesses and injuries sans
health insurance can be overwhelming. Take time to research health insurance
plans that provide balance for your family and make the expense a mandatory
line item in your monthly budget. Can’t afford cable and health insurance?
Choose insurance and opt for Netflix or Hulu. The financial risk associated
with going insurance-free is too high and will likely jeopardize your financial
stability in the future.
There are a variety of options that will insulate your
family from paying retail for medical services while still fitting into your
monthly budget. For example, a high-deductible plan may be something to
consider if your family is generally in good health.
Issue No. 5: Conflicting
Financial Values
Money is the No. 1 cause of divorce in America, yet it
has nothing to do with how much or how little a couple makes and everything to
do with differences in goals and values toward money.
Solution: Talk it Out, Get on the Same Page In a marriage, you’re on the same team. This means you
need to reach an agreement about how your household will spend and save money.
Compromises and open discussions need to happen on a regular basis. In my own
life, my husband is the “spender” in our relationship and I’m the “saver.” We
compromise by creating a strict budget that allows for some saving and some
discretionary spending. For us, if we didn’t communicate about how our money
was spent, we’d wind up overspending. Take preventive measures to avoid heated
arguments and make sure both of you have a voice in the discussions.
CONCLUSIONS:
Remember, most important avenues in our lives are full of
hard work. Having a happy marriage, moving up in your job, raising children and
making money play a critical role in the foundation of your life. If you keep a
realistic attitude and are willing to sacrifice today for the security of your
financial future, you can and will accomplish amazing feats with your money.
References:
Personal Finance, (June 8,
2021).
https://www.avantax.com/about/articles/5-solutions-biggest-financial-problems-families-face
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