Main causes of financial problems

8 Reasons for financial failure

To fight financially? Many people are, although they give everyone the impression that they have done everything. They work, live in a nice house and drive a nice car, but they live from day to salary. Here are 8 main causes of poverty in the first world.
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Living beyond your means

There is no way out of it. If you spend more money than you earn, then you need to get extra money from somewhere and this almost always means borrowed money, also called buying a loan. All this has costs and this is called interest. If you have a habit of buying things on credit, then the interest you pay throughout your life will increase to a fortune. Interest is sometimes called dead money because you have nothing to show for all the interest you pay.

Think about what you could spend with all this interest. It’s almost too painful to even think about, but if you want to avoid poverty, then you have to get your head out of the sand and face the facts; your financial future depends on it.

In step with Jones

Some people try to deal with their peers with whatever they spend their money on. This is a compulsion that will cost you a lot. Realizing an image of yourself will seriously impair your finances and will be costly until you stop working. You may think that your peers are doing well financially to afford these things, or you may even think that they have done well for themselves, but what you do not know may surprise you. That they may be in debt to the eyeballs. Even if they live within their means to finance their lifestyle, this does not mean that you have to keep up with them.
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Do not enjoy people and meet the expectations of others, live according to the right course of action for your circumstances and you will be far happier.

Consumer debt

Consumer debt, or dumb debt, as it is often called, is buying things with borrowed money. He spends tomorrow’s income today. Debtors usually do not forget what happens to the so-called things they bought on credit; that their newly acquired belongings cost less the minute they bought it. This is a crucial factor to consider; The money owed on the item is always more than what the item costs. No one is covered by the debt and poverty cycle so much, and not just those on lower incomes; in fact, middle-income people are prone to this trap.

Commercial greed

Commercialism in the 20th century brought much prosperity; provide jobs and create countless businesses, but there is another country. The world’s first poverty caused by an insatiable appetite for things. People are not just satisfied with the things they need, but continue to want more. All this has to be paid, this is money that could be used to build a financial base for their future.


Addictions are very expensive; just ask all smokers. You don’t have to be a mathematician to calculate how much cigarette smokers pay for their addictions. It is valued at over $ 100 NZ per week. This equates to five grand per year and fifty grand per decade. No wonder many smokers are broken. It’s the same with those who are addicted to alcohol and so far.

Financial illiteracy

Financial illiteracy is the main cause of financial poverty, and not only low-income people are financially illiterate; high-income people may also be to blame. You hear stories of successful sports people who have earned millions during their heyday but are broken years after retirement. It is important to save and invest your money during the years in which you earn best to set you up when you no longer earn that much.


Failure to take responsibility for one’s own finances is irresponsibility. They will come up with all sorts of excuses for not joining the kiwisaver or contributing. Excuses like, “You can’t take everything with you,” “I could die before I retire,” or “I’m just young.” People who are irresponsible with their finances tend to be irresponsible in other areas of their lives. Making commitments, whether in a relationship, owning a house or a car or saving for retirement, takes responsibility, and that’s what separates men from boys.

Bad company

There is no doubt that bad company is the main reason why so many people live in poverty. It says, “You’re the average of the five people you spend most of your time with,” so it’s worth checking who you’re dating and asking if their attitudes and opinions about finances affect your money habits. To grow, you need people to help and encourage you. This sometimes means separation from bad company. Some find this difficult, but in the long run it’s worth it.