Financial struggles are universal struggles because we all live in a material world where we need money to access the material things we need. A number of people around the world have overcome financial struggles at different levels while the majority are still caught in this struggle to a certain degree..
I certainly do not claim to have arrived on the subject of money nor do I claim to be an expert. I have had my own struggles for many years, but I came to discover a few things that have helped me and my husband to move forward. This fundamental discovery according to Morgan Housel is that there are universal truths about money, even if people come to a different conclusion on how they want to apply those truths to their finances. Not knowing this truth, or not applying these truths is one major reason for billions of people who are struggling financially all over the world
I will be sharing in this article, the reasons why many struggle financially, based on my research, observation and personal experience. I will conclude by sharing some tips that have been helpful to me personally, and I have discovered that they are universally helpful for anyone who wants to solve the problems of financial struggles.
So let’s get started and address the question of why people struggle financially ? There are many reasons
Here are five I would like to share with you
One relying on only one source of income.. Majority of people only work to earn wages and that is the only thing they rely on. No more no less and this is a perfect recipe for financial struggle because I’ve been there for many years. Such a source of income cannot keep pace with your financial needs that are growing. Another reason is that you can only do so much work on your own within a limited number of hours in a day. Lastly, if anything happens to that single source of income, one can be in a very terrible financial shape . It is like driving a car without a spare tire
Number two reason why people struggle financially is lack of financial literacy. Most people including me for many years don’t know that there is a way money works. Financial literacy is defined as knowing how money works. People confuse academic or professional knowledge of money with how it practically works in real life. This is why you see even professors of finance and business, economists, and VPs of finance and big companies still struggle financially. Unfortunately financial literacy is not taught in most homes. It’s not taught in school and certainly in many communities where we grew up. So people dabble into life without being equipped on how to solve money issues. For the most part, all we are taught is to go to school, get good grades so that you can get a good job, that’s just about it.
Third one is when people do not invest . Financial illiteracy is a huge reason why people do not invest.. People say investment is risky or too complex or they are afraid they may lose money. So the impact of this is that they keep their money in the bank and the people who know how to use this money, borrow it from the bank and use it to create wealth and solve their own financial problems
The fourth one is when you don’t have financial Mentors. You want to go with someone who has already successfully done what you are about doing..
It’s too risky to undertake a financial journey alone. It is like driving a car when you have not learned how to drive from someone who already knows how to drive. Lack of financial mentorship is the reason why lots of people are making costly mistakes, recorded losses in their businesses and investments, and eventually pulling out completely. I started my financial journey like that too and I paid dearly for it.
The fifth one is when one is not smart with his money. People spend their money so frivolously in a way that impairs their ability to save and invest. Someone said people spend their money to buy things they do not need and to impress people they do not like. I will add that they spend their money to also impress people they like to the detriment of their financial freedom
There are many ways to overcome financial struggles. I will limit it to just five in this post .
One, having multiple sources of income is a solution to just one source. There is a need to identify other sources of income apart from income from your employment.
This is not suggesting that one needs to combine two or three jobs at the same time but one must understand that there are three categories of income . Earned income, which most people are familiar with.
Secondly portfolio income, which you earn by investing in paper assets.
Thirdly, passive income which you earn by investing in real estate or business . There is need to understand the different categories of income, and where you like your other income to come from
Secondly, you can have financial literacy by investing in reading books, listening to financial podcasts, attending seminars, conferences, joining investment groups, and developing a network of people who are financially savvy and learn from them. It is said that money grows on skills and not on trees. Having financial literacy will help you to develop some skills and interact with knowledgeable people. You get exposed to different information, tools, and resources that can help you upgrade your skills and take advantage of opportunities you may not have known about .
Third one, investing is another antidote to financial struggle. Studies have shown that most wealthy people make their wealth not from earned income, but from investing . An article published sometime ago, states that wealthy people earn 70% of their income from investments. The implication of this is that learning to invest has a potential to open you to a new level of wealth that could help to solve chronic financial struggles. Several reasons why people don’t like to invest include excuses for not having time, not being disciplined enough to put in the hard work, not willing to learn how to invest. The list goes on and on. I must admit that learning the discipline of investing is hard work, but the price of not putting in the discipline is much higher. Someone said excuses make today easier but tomorrow harder discipline makes today hard but tomorrow easier
The fourth point is having a financial mentor. This is very crucial. The question people get to ask me most is how do I get a Financial mentor? I must admit that getting a financial mentor is not a walk in the park. Like most valuable things, they’re not easy to come by. More so because they are always busy people. As a matter of fact, they are few, and far between. My recommendation is to start by reading books and following selected mentors who have the proof on the results virtually first, through reading their books, listening to the podcast, following their videos and so on and so forth. You can also get a financial mentor from being part of an investment club where you’re likely to see people who have been more successful at what you’re trying to do. In addition you can seek or get a referral or a financial coach that you know has the results and be willing to pay the price .That was one of the things that my husband and I did. We paid thousands of dollars but the investment is invaluable.
The fifth point is to learn how to be smart with your money. Avoid impulsive spending. Avoid piling up credit cards in debt of things you do not need. Learn to start budgeting and investing with the little extra money you have. Wastage is a leakage in your financial journey. Someone said beware of little expenses because it’s a small leak that will sink a great ship.
I want to emphasize that the ultimate solution to financial struggle is learning how to invest successfully . You are reading this article today and thinking investment is risky and don’t know how and where to start. I was once like you, until I began my journey in financial literacy.. You can also do the same. Do not let fear and anxiety keep you from taking the right steps to invest. It is said that worrying about losing is about losing before you begin. So I encourage you to stop worrying and take action to begin your own journey.
As I conclude, I have shared with us some of the reasons why people struggle financially. I have also shared with us some different ways to overcome financial struggles.
