More and more people are having budgeting issues. 2022 seems to be a year plagued with high inflation rates in the US and worldwide, and many are wondering how to fix money problems.

In this article, we will go through some of the most common problems of households, and we will provide a quick solution for each situation.

1. Low income

There are so many financial problems that people have, but one of the most common is having a lack of income. A lot of people have this problem, but don’t know how they ended up that way, or how to address it. That’s a very tough situation to be in, but you have two options at your disposal:

1. Minimize your expenses – it’s a bad situation, and you have to embrace it. Try to cut unnecessary expenses, like eating out, your Netflix subscription, and other things. You can also get rid of your car, and start using public transportation. How about sharing an apartment with others to pay smaller rent and bills?
2. Increase your income – that’s a much more favorable scenario but you have to be willing to sacrifice your time. Again, you’re left with a couple of options.

How to increase your income?

The first option is to start working an additional part-time job. You can use your profession to record some hours as a freelancer, too. It’s a very good way to earn more money, and live better.

There is another way. Instead of working extra hours, you can spend this time learning something new, which can get you a pay raise. You can even change industries and join more profitable ones, like technology, for example. 

2. Budgeting mess

You’d be surprised by the number of people who have no idea how to plan a budget. Even if you’re a high earner, you might still live month-to-month. Financial disorganization is a serious problem that many families face. Many people are tired of being so financially unorganized and want to learn more about effective money management techniques.

How to tackle financial chaos?

Fortunately, there are many budgeting apps out there that can help you find out where your money goes. Some of the best budgeting apps have integrations with your bank accounts, so your information goes directly there. There are many apps that also are optimized for couples!

3. Poor savings management

It’s a widespread issue that causes financial disorganization and is probably the root cause of many problems. While some families have very tight budgets and keep saving every now and then, many middle-class families don’t know how to save money, and eventually, fall behind their peers who invest.

How to tackle this problem?

First of all, you should start operating with your money. Risk exists but if you don’t operate with your savings, there is 0% risk that you will end up spending your savings on something either useless or inflation will eat them up. Cryptocurrency investing and real estate investments have proven to be good ways to lock your extra funds into. People who buy Dogecoin and other cryptocurrencies can retire earlier since cryptocurrencies will naturally inflate over time. 

4. Crippling debts

Consumer debt has a significant negative impact on U.S. families’ finances. But the consumer debt crisis is something that can be fixed. By educating people on the destructive nature of consumer debt and helping them to reach their financial goals, we can keep more families out of bankruptcy.

How to get out of this situation?

When your credit card balance is higher than it should be, it can feel like you’re drowning. Instead of being buried in debt and finding yourself a couple thousands dollars in the hole each month, consider breaking free from debt by paying out everything up front. Student loans and mortgages are a bit hard to pay soon, but consumer debt is something you should avoid, especially given the high interest rates.

5. Unemployment

It’s essential to have a contingency plan when it comes to job loss. Although losing the majority of your monthly paycheck is never fun, there are plenty of ways that people can prepare for such a worst-case scenario.

How to solve job loss problems?

The first thing to do is to see how big the risk of losing your job is at the start. There are many industries which are waiving people for nothing. The financial industry is one such example. Mitigating risks from the start is crucial. Another thing to do so is save money. In the most pessimistic case, you should have 6 monthly salaries, but you should aim to have at least a year’s worth of salary savings.

Summary

Finding solutions to typical family problems is crucial if you want to live a good life. And when life gives you lemons, make a lemonade!

Published by HOLR Magazine.