If you have financial problems you are definitely doing something wrong with your personal finances either knowingly or unknowingly.

If you have certain income that allows you to lead a good quality of life, but you are still in debt and full of economic problems then you probably haven’t learned how to manage your money.

Economic problems are the result of bad financial decisions, ranging from not saving a portion of your income, believing that there is the perfect time to invest, making lifestyle too expensive and others.

Before knowing the causes of your financial problems, it is important that you recognize that the problem is with you; it is not the fault of the government, your parents, the business cycle or your boss.

It is your decision and action that has led you into this situation. So if you want to learn how to get out of debt and improve your economic life, you must recognize that the only person who can reverse this situation is the one reading this article.

The main reasons for financial problems

10. Not having an emergency fund

An emergency fund is your first line of defense against unexpected economic problems. And usually, these occur frequently.

Whether your car broke down, something in your apartment needs to be fixed, or a medical emergency for which you need medication.

What happens when an emergency occurs and you don’t have a way to cover it? Usually you have to take out personal loans.

If you want to start solving your financial problems, create an emergency fund with an amount equal to six months of your income.

Additionally, keep it in a place where you can dispose of it when you need it; it’s not about generating income with it, or investing your money from this disposable income in risky assets.

It’s all about having it available when you need it, so don’t think about its profitability.

9. Not having clarity about what will happen if you are not there

If you have a family, it is important to make it clear what will happen to your estate if you are not there.

A will, for example, can avoid many financial problems in your family, as they will know what they are entitled to, when and to what extent.

The worst diligence is the one you don’t do, and in the event of a lack of it, the government is in charge of making the distribution. Not an attractive idea at all.

8. Not having the right insurance

How many financial problems would you avoid if you had insurance? For many people, insurance is an unnecessary expense that impoverishes them.

Why not see it as an extension to your emergency fund?

Insurance is a kind of saving that helps and protects you from replacing and covering your most important material assets such as your house, car and even investments, to your life in the event of death or disability.

Insurance that can help you avoid financial problems includes insurance for your – car, home, life in the event of injury or death, and health.

Finally, don’t be “overprotected”. Many times, seeking good coverage ends up paying excessive amounts that are not worthwhile.

7. Marrying the wrong person

What economic problems are related to marriage? The first is to marry someone who wastes his/her money, and the second is to get divorced.

Choosing your partner is a crucial step in building wealth. And when your partner knows and applies the advice of good personal finance, it makes it much easier to reach your goals.

According to the Journal of Sociology, a divorce is a serious blow to any couple’s finances, as people who divorced saw their wealth decrease by 77%.

In short, as Napoleon Hill puts it in his book – Think and Get Rich, choosing your partner influences the level of wealth you achieve.

6. Not saving a portion of your income

To avoid economic problems, and to achieve financial prosperity you must do two things:

The first is to spend much less of the income you generate, and the second is to maintain this habit in the long run. I mean, doing it for a long time.

Why are you getting rich? Because you’re saving and investing this money. One of the keys is to start saving as soon as possible in your life, so that compound interest can improve on your finances.

How much should you save? At least 10% of your total income must be saved and over time increase this percentage.

You can invest this money in property, secure investments, a business you plan to start, or any other project that generates future income.

5. Buying a home that is too expensive

Many people dream of buying their own homes. As Thomas J. Stanley puts it, in his book Stop acting rich and start living like a real millionaire:

“If you’re not rich yet, but you want to become rich, never buy a house that requires a mortgage that’s twice your family’s annual income.”

In other words, never buy a home, with credit that will cause you to postpone the rest of your financial goals.

Many people get into debt beyond their ability to buy the home of their dreams. The problem with this is that you will end up living in debts giving you a nightmare full of financial worries.

4. Waiting for the perfect time to invest your money

Like many things in life, time ends up playing a fundamental role in the world of investments.

What are the determining factors in the return on your investments, or the money you have saved?

First is the amount invested. Second, the rate of return on your investments, that is, the profitability. And finally, the time during which they are invested.

Although the media and “experts” investors try to sell you the idea of getting rich overnight, the real factor that influences the construction of your wealth, and therefore the end of your economic problems, is the timing of your investments.

That’s why the longer you wait to find the right time to invest, the harder it will be to get the results you expect.

And the longer you wait to save and invest, the more you’re costing yourself.

3. Being over-indebted

It has been stated that “over a lifetime, the average American will pay over $600,000 in interest”

There is no other clearer way to show what debt can do to your quality of life and the financial problems it can cause you.

However, remember that there are good debts, those that allow you to generate other income and cover interest.

2. Not working to maximize your career

There are professional careers that will make you a millionaire faster than others.

It is said that the average American can earn two million dollars in his or her lifetime.

Now, if that same person works hard and increases his or her income by 8% per year, he or she could earn more than 3 million more than this figure.

While the figure may not apply to certain countries in Latin America, it does apply to finding ways to increase your income and avoid future economic problems.

So invest in your professional training, never stop learning and surround yourself with people better than you.

If you want to change jobs, never quit without another safe opportunity, and secondly, take care of your physical and mental health, as your ability to earn money depends on both.

1. Finally, spending more than you earn

It’s quite simple, financial problems occur when your spending exceeds your income.

The first step to being a millionaire and having wealth is to stop pretending to be one. Spending less than you earn is vital to financial progress.

Ask yourself what you spend your money on:

On the one hand, they can be small expenses: dining out, restaurants, clothes, cafés and other expenses that get bigger over time.

The other explanation is large expenses, such as an expensive house, cars, travel and poorly advised investments.

Most economic problems are due to how poorly they invest their money, not so much the amount they generate annually.

Simply when there are too many unnecessary expenses, there is no room to save and have financial projections.