5 reasons people stay in debt
Every day, millions of people go deeper into debt. Credit cards, student debts, car loans, Afterpay – the list goes on. If left unchecked, debt can be a slippery slope that can quickly spiral out of control. So, why do people stay in debt? Let’s take a look at the 5 key reasons.
1. They don’t know how to manage their money
Money is a contentious topic in most households and is something that many couples avoid talking about. To efficiently manage your money, it’s crucial to have open conversations and a clear idea of exactly where it’s going each month.
Making the most of the technological tools at your disposal can give you a detailed look at your income, spending and taxes. This overview can establish where money is being poorly spent, helping you keep on top of spending and debt.
2. They don’t have the right info
Savings, budgets, interest rates, investments – these are all things that can make or break your financial position, yet they are also areas that many Australians know little about. Healthy financial freedom starts with strong financial literacy and financial literacy starts with good information.
Making financial decisions without the right information is like making decisions in the dark. Becoming financially literate gives a strong foundation to make better choices and more efficiently manage your money.
3. They don’t seek the right support
Too many people make the mistake of increasing debt and not reaching out for professional support. Think about who is best equipped to provide you with quality information and guidance, and allow them to support you in improving your financial position.
4. Their expenses are too high
Getting on top of debt does not come without compromise. You may need to forfeit a few creature comforts and reduce your expenses if you’re ever going to chip away at your debt. Unless you increase your income (e.g. changing jobs or a salary increase), certain sacrifices may be needed to keep your expenses and debt down.
5. They’re living beyond their means or keeping up appearances
Your public image may be extremely important to you and it’s undeniable that there can be a performative nature to spending money. Getting bogged down in appearances and what you think your clothes, car and house say about you do no favours to your financial position. Stop the comparison and instead put your energy into preventing a lifetime of debt.
Your road to improving your financial health
With the right information, tools and support, you’ll be on track to improving your financial health and achieving your goals. Starting small, anyone can improve their financial literacy and be better equipped to take on new challenges and investments in life.
Contact the Advantage Consulting team to learn more about taking the reins on your finances.
This is general advice and has been prepared without taking into account your particular situation or needs. You should consider whether it is appropriate for you before acting on it.