5 Common Financial Problems (and How To Resolve Them)

If you’re experiencing financial problems, know that you’re not alone. While money issues are very common, personal finance can prevent them and help you manage your finances wisely so you can meet your short and long-term goals. Let’s dive deeper into some common financial problems, solutions, and loan options to consider.

How personal finance works

Personal finance is how you spend, save, and manage your money. It covers a variety of topics including income generation, budgeting, banking, insurance, loans, investments, retirement planning, and taxes. The goal of personal finance is to make smart decisions with your money so that you enjoy more freedom and less stress.

Common financial problems and solutions

Some of the most common financial problems and their solutions include:

No budget

A budget is a spending plan based on your income and expenses. It can help you make the most of your money and use it to meet your goals. Unfortunately, many people don’t have a budget. Having this financial problem might mean they can overspend, fail to save, or go into debt.

To solve this finance problem, you can use a common budgeting method like the 50/30/20 budget, where you designate 50% of your monthly income toward necessities, 30% toward non-essential spending, and 20% toward your savings. This can help you track your expenses and start building up your savings.

Overspending

Overspending is a financial problem that means you spend more than you can afford. It’s not uncommon for people to live beyond their means and spend too much on housing, food, clothing, entertainment, and other areas of their lives. Tracking your expenses by creating and sticking with a budget can help solve this common finance problem.

Too much debt

Debt is money that you owe to a credit card, bank, lender, or even friend. Most Americans live with at least some debt. Debt often leads to stress and prevents people from buying a house, traveling, retiring, and meeting other financial goals.

You can solve this financial problem by working to pay down your debt over time, using a common debt payoff strategy like the debt snowball or debt avalanche method.

Poor credit

When you apply for a loan or credit card, a lender will usually look at your credit to find out if you’re a responsible borrower. Many people have poor credit, which can lead to denials, high interest rates, and unfavorable terms. This financial problem may also cost them thousands of extra dollars over their lifetime. You can improve your credit score over time by making on-time payments, maintaining a lower credit utilization ratio, and avoiding too many hard credit inquiries by limiting the amount of new accounts you apply for all at once.

No savings

Saving money is important because it can help you avoid debt and protect you during a financial emergency, like an unexpected car repair or medical bill. Some people spend most or all of their money and have nothing saved up. Because of this, they often find themselves in a cycle of debt.

You can solve this financial problem by putting a certain amount of money toward your savings each month. Even if you can only contribute a few dollars, these funds can add up over time and may come in handy when you’re in a financial bind.

Loans that can help you resolve financial problems

If you’re facing a financial problem, these loans may offer an easy solution:

Payday loans

Payday loans are short-term, small dollar loans you can pay back when you receive your next paycheck, often within two to four weeks. These loans can solve your finance problems by covering your expenses until you get paid next.

Installment loans

Installment loans give you a lump sum of money upfront. You’ll repay them over time (anywhere from a few months to several years) via fixed monthly payments, or installments. These loans might make sense for your financial situation if you need a lot of cash at once.

Title loans

Car title loans are secured loans that use your car as collateral. Once you’re approved, you’ll give the lender your vehicle title in exchange for a lump sum of cash, based on the value of your car. You’ll be able to drive your vehicle as you pay back your loan. If you own your car, a title loan can be a good choice to fix finance problems.

Lines of credit

Lines of credit are similar to credit cards but usually offer lower interest rates. You can withdraw funds as much or as little as you’d like up to a set credit limit, and you’ll only pay interest on the amount you borrow. You may want to consider getting a line of credit to solve your finance problems if you want some flexibility.

Get help with your personal finance problems today

Advance America offers a variety of personal loans that can help fix your financial problems temporarily. These include payday loans, installment loans, title loans, and lines of credit. You may apply in store or online from the comfort of home and get your money quickly, sometimes within 24 hours. Visit Advance America today to learn more about the loans we offer.