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Frustrating Finances: Three Reasons That You Might Be Having Money Problems

 

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It’s pretty common to worry about money. In fact, it might be the most common cause of worry and anxiety that there is. People’s financial situation is constantly hanging over their heads, causing them to fret over even the simplest decision. If things get really bad, it can stop people from feeling able even to open their mail a lot of the time. Once things have reached that point, then it’s become pretty clear that things can’t go on as they have been and something has to be done. The problem is that it’s very difficult to know where to start. The answer is actually rather straightforward and obvious. Before you can solve any of your financial problems, you’ve got to be able to identify exactly what it is that’s causing them. Of course, there are plenty of potential reasons that you might have some money troubles. Here are just a few and how you can deal with them to get yourself back on track.

Out of control spending

This is by far the most common cause of a lot of people’s financial woes. In reality, most of us don’t actually realise how much money we’re spending on a day to day basis. You might think that a small purchase here and there won’t make any difference at all. After all, what are a few dollars count for in the grand scheme of things? While this might be true, the problem is that those few dollars start to add up over time. The only way to get this under control is to start budgeting more carefully. If you are able to keep track of your money, then you’ll probably discover that over time, those little purchases add up to a pretty significant sum of money that you could be using much more sensibly.

Debt

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Debt can have awful effects on you beyond just your bank balance. It can have some serious, long-lasting psychological implications as well. After a certain point, dealing with large amounts of debt can make it feel impossible ever to get yourself out the financial situation that you’re in. Not only that but debt has catastrophic effects on your credit score. A lot of people tend not to think about their credit score, but a bad one can set you back pretty badly. This includes making it harder to get approved for a loan as well as discouraging landlords from accepting you as a tenant. Check out yourcreditblog.com for more details on how to check up on and improve your credit score.

Household bills

A lot of people don’t realize just how much less they could be paying for their household bills. By making just a few simple changes to your lifestyle, you can cut your energy bills by as much as half! Far too many people waste huge amounts of heat and electricity that basically counts as money down the drain. Look into ways to save energy and you will find that your general monthly outgoings go down significantly.

Teach Your Children About Affording A House

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Your child most likely loves your house. Whether it’s been the family home ever since they were born, or a recent buy, those four walls and the memories made within them mean the absolute world to a young mind which is still learning about life, money and all the confusing things inbetween. It’s up to us to take the opportunity, whilst our children are growing, to help teach them about the boring ‘behind the scenes’ elements to owning all these luxuries we take for granted. If they want the perfect home when they’re older and have their own family, you’ve got to teach them how that works.

Financing a home may not be something your child understands right now, but as they get older, there are some steps you can teach in order to help instill financial independence and understanding in your children as they become young adults and get closer to having to make these decisions for themselves. The key is to ensure that their spending, even at expensive times of year such as the holidays, never outweighs their saving.

Talk about debt early on.

Before your child can consider buying a home, they’ll have to take a look at their finances. Young people in the current economic climate feel discouraged from buying a home, because they’re overwhelmed by all the debts and other costs of life which they feel will take too large a chunk out of their income for them to be able to afford anything else.

Of course, this isn’t true. If debt and other costs are approached early on in a young adult’s life, they’ll find that affording the bigger things and achieving that stability they seek becomes much easier. Teach your child that disposable income can be disposed on something really valuable today, so that they can have all the luxuries they want tomorrow.

If your child loves the idea of owning a home now, then help them ensure that dream becomes a reality when they’re older, rather than dwindling away when they realise they aren’t financially prepared for it and it may be a long time before they are.

Mortgages aren’t a scary thing if you have a stable job.

You might be wondering about the future for your children, considering the dire situation facing many younger people struggling to break into their industry and career of choice. However, it doesn’t have to be so bleak. Help your child prepare by teaching them about the costs of owning a home and the savings which will need to be made. Once they understand the costs, they might feel motivated to pursue a specific career or work harder at high school, or college, in the hopes of attaining a stable career and being able to cope with the financial element of having the perfect home.

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Houses can be expensive on the whole, but I’m sure you realise there are manageable ways to afford the right home with the right job. With a Homestead Financial Mortgage, for example, your child, as young adult purchasing a home, could be set for life with a manageable, fair way of paying for their home gradually.

Remember, teaching our children about finance is our job. If you want to ensure they’re prepared for the future and owning a home, pass on all the knowledge you can, along with the tips we’ve given here.

How To Get Out Of Debt & Stay Out

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The decision to get out of debt is always a good one, but it’s often hard to know where to begin – especially if the debts you have are quite large.

While the scary numbers will cause many people to bury their head in the sand and choose to ignore it, taking the first step to eradicating the debt from your life is a crucial step in the overall process, and one that, if you stick to it, will help create a much better relationship with money in the future, even if it wasn’t taught to you as a child.

Below are some tips on how you can begin to, not only get out of debt, but actually stay out.

  • Get honest with yourself: so many people are afraid to open bills as they start mount up, but this avoidant behaviour can lead to serious problems down the road, so no matter how scary it seems, you need to open those letters and face them head on. In most cases, the idea of something is much worse in our head than it is in reality, and you normally find that it’s a loss less intimidating once you know what you’re dealing with, and that it’s a lot less in terms of numbers, too. You need set aside a couple of hours one day and go through everything you owe, then either write it down, or put together a spreadsheet.
  • Make a plan: if you’re going to pay off all your debt, then you need to really make a strict plan for yourself that you know you’ll stick to. How you choose to pay things off is really up to you – you can choose to pay small amounts towards each debt, or you can focus on one debt at a time, but what’s important is that you have a plan with a deadline that you can realistically achieve.
  • Reach out to those you owe to: this is actually a pretty important step that many people overlook because they either find it too scary or don’t think there’s any point in doing it, but in actual fact, reaching out to those you owe money to can help you in a big way. All you do is either write to them or call them, and explain your situation.

You can ask them for a payment plan and really let them know that you’re ready to pay everything back. In most cases, they will be more than happy to work with you, and typically they will waive the interest as long as you stick to the payment plan you agreed with them. As interest that keeps adding up is really one of the biggest issues when controlling debt, then this can make a huge difference.

  • Consolidate: if you just want to be done with the debt as quickly as possible and bring everything into one single payment instead, then looking for a way to consolidate your debt is a good idea. There are a few ways to do this: one would be through a loan from someone like Enness Bridging Finance – the other would be to speak to a debt consolidation agency who work on your behalf with the companies you owe money to. Usually these companies can get the interest, and instead of giving you a cash loan, they basically take on the debt and then you agree to pay them a small monthly amount which they divide across all of the people you owe money to. Doing it this way obviously takes longer than a loan, but it’s a good way to go if you can’t afford to pay back a loan or have trouble obtaining credit.

Amazing Sources You Can Turn To For Money Advice

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Not sure what you should do with your savings? Do you have money in an investment that is now starting to look very risky? It sounds like you could do with some money advice! No matter what type of question you have, there are plenty of sources you can turn to. Each one will be able to give you some solid financial advice. Not sure where to go for the best advice? Here are some of the best sources for financial advice.

Finance Blogs

Thanks to the Internet, it is now easier than ever to get advice about your money. One of the best places to start is by looking at financial blogs. Most finance blogs are written by people who have experience working in the financial sector. In fact, many bloggers are retired wealth managers. If you take a look through all the articles on the blog, you will find a great selection of articles on various financial topics. If you can’t find your answer in an article, don’t be afraid to send one of the bloggers a quick question. I’m sure that they will be more than happy to help you out!

Wealth Managers

If you have a lot of money to invest but aren’t too sure what to do with it, you should speak to a wealth manager, such as Ian Filippini. The wealth manager will be able to look at your current financial situation and figure out which are the best investment options for you. Not only that but once you have invested your cash, they will manage the investment for you. That means they will keep a close eye on it to make sure that your money continues to grow. If an investment looks like it is becoming a risk, your wealth manager will review other options where you could move your money to.

Charities

If you don’t have a whole lot of money to afford a wealth manager but still need some expert advice, you can always speak to a charity. There are a number of charities that have been set up to provide people with lower incomes financial advice. Most of these charities specialise in advice relating to getting out of debt and paying off loans and credit cards. If you give your local charity which offers financial advice a call, you will be able to set up an appointment to go in and speak to someone.

Financial Newspapers

It can also be worth picking up a daily financial newspapers, such as the Financial Times. These are full of local and national news stories, but they are also jam-packed with a lot of extra financial information that you won’t necessarily find in other everyday papers. The Financial Times also has a daily roundup of share and fund prices, so you can always quickly check to see how your investments are doing.

It is very important that you know where to go for professional financial advice. That way, you will be better equipped to manage your money and help it grow!

Is the Virtual World Contributing to Financial Illiteracy?

There is no doubt the internet has changed the way we shop and make purchases. Not only has it made things more convenient, letting us make purchases from the comfort of our own home, but also internet shopping has removed the need for cash. Even when we do venture out to go shopping, many people forgo physical money altogether, preferring instead the convenience of paying for everything with plastic. However, if you have children, this may not really be a good thing.

The problem with this cash-free society is that it makes teaching children about the value of money incredibly difficult, because children have nothing tangible to learn with. Even when we withdraw cash from a bank machine, the concept of where this money comes from can be quite difficult for a child to grasp. After all, you have simply inserted a plastic card into the wall and received cash.

There can also be issues with parents opening up bank accounts for their children. While on one hand this is a good idea, as it helps children learn about saving and earning interest, it can also remove the tangible nature of money because looking at numbers on a bank statement is far removed from counting out coins from a piggy bank.

Is a cashless society causing financial illiteracy?

Plastic culture

Of course, children need to learn about using plastic. Both credit and debit cards are essential and unavoidable tools they will have to get to grips with by the time they are adults, and by the time today’s children grow up and become financially independent, credit and debit cards are possibly going to be replaced by the next generation of phone or watch based payment. However, without a basic understanding of money, where it comes from, the difference between debit and credit, and knowing that money spent equates to money earned, we could be at risk of bringing up a generation into this virtually cash free world with high levels of financial illiteracy.

Already, many children are growing up with a limited grasp of how debit and credit cards link to physical money. Many parents make purchases for their children on the internet, buying books, video games and other items. Some parents are even giving children their very own credit card to make purchases or to act as a safety net in case they need money when they are out. In addition, other parents readily offer up their credit card details to their children so they can purchases on the internet themselves or even open up credit accounts on Amazon, Netflix or iTunes, all of which can have unforeseen consequences.

The blurring of real and online worlds

A good example is the number of parents who open up accounts for their children to play apps and games online. As most parents know, online gaming is incredibly popular among children, but many games not only require a monthly subscription to play, but also in many cases, allow players to purchase additional items in the games using real money. Of course, parents have to hand over their credit card or debit card details to open the accounts for their children, which is where the danger lies.

An increasing number of news stories have highlighted incidents of children running up huge credit card bills by making purchases while playing online games. Many of these children are very young, so don’t grasp the concept that buying things in a virtual game world has an impact in the real world. In addition, the number of children that run up bills by making online purchases without their parent’s knowledge is rising too.

All this shouldn’t come as a surprise, because but with so many of us now making online purchases, the line between the real world where money is physical and has to be earned, and the virtual world, has become blurred. It is, therefore, no wonder that children have a hard time grasping the basics of financial management and how credit cards should be used responsibly, which could be costly when they grow up.

Young debtors

There has been a significant rise in young adults, and in particular, students, getting into deep financial trouble because of improper credit card use. In the United States, one fifth of all bankruptcies are filed by college students, and the picture is not much better in the UK. Most students have little or no credit history, and yet many are offered credit cards as soon as they start university. The consequence of this is that many students are getting into difficulty. Even by university age, not enough students have an understanding of interest rates and charges, but one of the biggest dangers is the ease in which credit cards give ready access to cash. Credit card cash advances are controversial, because they can encourage irresponsible behaviour. Making purchases with a credit card is one thing, but withdrawing cash that may be spent on anything, including socialising, leads many students to become debt ridden before they’ve even started work.

Another problem is that many students are leaving school with high levels of financial illiteracy and without a strong psychological link between actual cash – the physical money they earn – and the money they see in their bank account and credit cards statements, which is compounded by the reliance of plastic for online shopping and the diminishing use of cash, as mentioned earlier.

Back to basics

This psychological link is an important one too. Because even if a young person understands that the money borrowed on a credit card has to be paid back, psychologically and subconsciously this link can remain fuzzy. Growing up in a world where money is not tangible, but virtual, means the psychological link between what you have and what you have earned with what you can spend can be difficult to develop, but as with most things, by teaching children about money and the value of things at a young age, can help reinforce this psychological link. This is why The Financial Fairy Tales Books seek to teach both money skills and values.

Money advice for parents

Most children get money quite early on in life, whether as a Christmas or birthday gift or as pocket money, and often this is where developing this psychological link should start. For instance, paying money directly into a child’s bank account may seem like a good idea for encouraging the child to save, but actually handing them the physical cash helps enforce the idea that money is a tangible thing that exists beyond the numbers on a bank statement or online account.

Secondly, many parents make online purchases for their child and either deduct the money from their child’s pocket money, transfer it out of their bank account or even not take it from them at all. By far a better tactic is to make your children physically hand over the cash before you make any payments online, which again, will reinforce that what is spend on the plastic has to come from somewhere. The same is true in making purchases in physical shops. The act of handing over physical money and receiving change shouldn’t be underestimated, and neither should the importance of the trust old piggy bank, as it can provide a child with something that is physical, tangible and visible, rather than virtual.