The Complete Guide to Solving Financial Problems

Solving financial problems requires thinking long and hard about your goals. This complete guide will help you solve most of them!

Financial problems come in many sizes and they affect people from all walks of life. If you want to solve your financial problems, you need to approach them in a different way compared to how you have been doing recently. The UK is a nation full of spending as seen from how much we spend daily. The Money Charity found that the UK spends £2 billion per day on plastic cards such as credit cards and debit cards. When you are someone who spends a lot of money, you need to think about how to make sure that your finances are rock-solid. Solving financial problems is one way that you can get yourself back on track when it comes to your personal finances. Take a look at our guide to get the ball rolling on tackling financial issues in your life:

1) Assess the problems in your personal finances

Everyone is different when it comes to money and saving. If you are a spender, you need to look at where you overspend and start attacking this as a ‘problem area’. Everyone has problem areas in their personal finances even people who are very good at saving. Whether you overspend on lattes or you spend too much money buying gadgets, you should assess the impact of your spending on your future dreams. For spenders, try and cut back on spending on things that you do not need to buy. For savers, think about whether you are saving too aggressively to the point you cannot enjoy your life in the present. Ask yourself what is your biggest financial problem and write it down now.

2) Once you have written it down, write the word ‘SOLUTION’ next to it

Financial problems need solutions in order to stop plaguing you. Let’s imagine that you have a loan repayment to make but you have run out of money to make the payment in 5 days. You do not think you can borrow from a friend or family and you definitely do not have any money saved. When you write down the word ‘SOLUTION’ on a piece of paper, here are the actual real solutions you have:

  • Call your direct lender: Your lender can be sympathetic if you are in regular communication with them. Do not go quiet and don’t think that this is going to help matters. Get in touch with your lenders in any way such as email and by phone to explain your situation. If you are a regular borrower, ask them to waive a late fee so that you can get your house in order.
  • Ask for a payment extension: You could ask your lender if you could have a payment extension. Payment holidays are also another option where you ask to take a break from making a payment so that you can organise your personal finances.

Once you have chosen your solution, write down what action you are going to take. There is no use just thinking about it. You need to take action so that you can solve this personal finance problem.

3) Create a detailed plan:

Plans come in all shapes and sizes and we all know how easy it is to dream up a plan but following it through is another issue. Here is an example – let’s say that one of your problems is you cannot save money. No matter what you do, you simply cannot save money so that you have a solid financial platform to live your life. If this sounds like you, you need to start from scratch and get to work. Take a look at these top ideas on how you can create a detailed plan to fix your financial problems:

  • Make a plan that is realistic: If you are trying to solve a big financial problem, you need to be totally realistic about what you can and can’t achieve. If you don’t earn a lot of money but you have a £10,000 debt payment to make, it can be really hard for you to think about how you are going to tackle your debts. You should be realistic about how long it will take you to pay off your debts if this is your problem. Like in reality so that you can achieve your goals.
  • Choose a timeframe: You need to know how much time it is going to take in order for you to solve your financial problems. Some people want to solve financial problems as soon as possible whilst for others it can take years. If you want to take control of your finances, choose between three, six and twelve month time periods. This will allow you to adjust your goals so that you can repay all of your debts but still be able to have a normal life.
  • Stick with your plan: Solving any financial problem that is significant such as repaying debts means that you need to be dedicated to sticking to a repayment plan for example. You should not just create a plan then throw it away. Stick with your plan wholeheartedly if you want to solve all of your financial problems.

4) Join a support group for debt

If you are in debt and you are struggling to keep up, it is a good idea to join online support groups on message boards and forums, for example. These can help you stay focused on repaying your debts if this is your main financial problem. You don’t need to use your real name and you don’t need to go into detail about the financial problems that are affecting you. These online message boards and groups can help you get on track and by discussing your problems; you can feel that you are not alone when it comes to tackling these problems.

5) Understand how your mortgage works

One of the most significant financial decisions you will ever make will involve purchasing a home. If you decide that you want to get on the property ladder, you should understand how your mortgage works. Will you have a mortgage that goes up depending on the interest rates or will your repayments be fixed? It is really important to know the answers to these questions. It is not enough simply save money for your deposit. You need to know the intricate financial details about your mortgage. Ask your bank or a financial advisor for advice if you are unsure.

6) Decide how to deal with big overdrafts

Overdrafts are popular in the UK but the question you should ask yourself if you are overdrawn is how do you bring your finances back together? To answer this question you need to know how much you are overdrawn by in order to assess how you can deal with it. If your overdraft amount is too much, you should contact a financial advisor. It’s critical to understand that having a bank overdraft that is too big will hurt your personal finances because you will find any money you deposit being sucked into the overdraft hole that you need to repay. It is a good idea to speak to someone in person at your local bank branch if you think that your current overdraft is too much for you to manage. Always make sure that you communicate with your bank to decrease any problems.

7) Write down how many consumer loans you have

Short term loans are some of the most popular financial products in the UK with millions of Brits using them at some time. If you have several consumer loans that you need to repay, stay on top of payments by logging exactly how many repayments you need to make and on what days. Don’t expect your head to remember this. Write down all of the repayments that are required to be made every month so that you can keep your finances in check.

8) Talk to your family and friends so that they know your situation

If you have financial problems, inevitably your friends and family will notice that you are struggling emotionally. Financial problems manifest themselves differently in various people. If you feel like you are struggling to keep up, contact someone that you trust within your family and friends and just let them know your situation. Even if they cannot help you directly, just being able to talk to someone is enough. Some people do not want friends or family to know about their problems. Make sure that you share your financial problems with someone that you trust so that you avoid bottling up your emotions about your finances. By being transparent, it is easier to solve your financial problems and you can ease the burden off you.

9) Adjust your living expenses

The cost of living is one thing that has a huge effect on our personal finances. The economy, political headwinds and inflation are three of the many factors that affect how much it costs for you to eat and survive. If you are noticing that living expenses are going up, you need to make more money or you need to decrease your costs. For example, if the cost of living is too high for you in your current area, you might need to move to a place that is cheaper to live within the UK. Adjusting your living expenses will inspire you to get your personal finances sorted out and it will also allow you to save. By making changes to your living expenses, it will become easy to solve this financial problem. Many people constantly complain about how expensive it is to live. It does not have to be this way – you need to look for new ways to save money and cut expenses.

Solving Financial Problems

10) Fix a bad credit rating

One problem that plagues many Brits is not having a good credit rating. A credit rating is a measure of whether you deserve to have credit. Credit is what powers the economy that we live in because through credit allows people to start businesses and hire people. If you have borrowed money many times from banks or consumer loan companies but you have struggled to make repayments, this will hurt your credit rating. This might make it harder for you to get a mortgage in the future, for example. You should do everything in your power to fix your bad credit rating. You can do this by making repayments on time. This will help to improve your credit rating. The financial decisions that we make today will completely affect how we live tomorrow. Make fixing your credit rating a top priority because when your circumstances change, you never know how much you could need credit so that you can grow your business or improve your current situation.

11) Paying monthly credit cards

The UK Cards Association found that recently credit card spending grew by 5.1% in the country while debit card spending grew by 6.5%. The growth rate for credit cards shows that Brits still like using credit cards to purchase things. The basic premise of a credit card is that you use it to make purchases and at the end of the month upon receiving your salary, you can repay it in full. You need to be kind of person that repays the full amount to avoid paying late payment fees. Monthly credit card repayments can be a drag for some people. If they are becoming a problem for you, change how you think about them. Instead of seeing it as free money, see it as a loan that the bank is giving you that you need repay back on time. The longer it takes for you to clear your credit card repayments, the tougher it is going to be to achieve other personal financial goals. Making minimum repayments is fine to get started but the ideal situation is paying off the full balance every month.

12) Paying for emergencies

Emergencies such as a sudden death or falling ill are factors that no one wants to think about but they are both realities of life. Regardless of what your emergency is, you need to think about how you are going to pay for them. Emergency payments are some of the most stressful things that you can think about especially if you don’t have the money. You need to start saving money for an emergency fund to eradicate this problem. Saving for an emergency fund will require you to decrease your personal spending so you can free up cash for an emergency pot of savings. Emergencies can create serious stress if you do not have a financial safety net to catch you. Make creating an emergency fund a top priority if you want to decrease the amount of financial problems that you have in your life.

13) Change how you put money away

If you are tempted to withdraw cash that you save, it is a good idea to get an account that is ‘locked’ so you can’t access that money straight away. You could put the money in a savings account that bears interest so you can’t instantly withdraw the money. This type of self-restraint is absolutely critical if you are going to fix your financial issues as soon as possible. Some people have excellent self-restraint and don’t touch their savings; other people cannot help themselves. If you are part of the latter, you need to have different savings accounts for different reasons so that you do not raid the accounts and then be left without any money.

14) Living without a budget

Learning how to budget is absolutely critical if you are going to change your financial personality. Many people exist without a personal budget and immediately run into financial problems when they run out of money. You need to learn how to budget for your personal expenses if you are planning on eradicating this problem. Your budget is directly matched with how much money you earn. The more you earn, the more leeway you have to create a relaxed budget. You need to create a monthly budget because this will teach you how to manage your money effectively.

15) Overspending

Overindulging with your money is a problem that can wreak havoc on your finances. Living on a budget means accounting for everything including shopping for fun things such as clothes, perfume, makeup and gadgets. Don’t overspend when you are trying to manage your personal finances. For example, if you have £20 to buy new clothes, try and spend under this amount. Don’t stretch yourself to spend more than £20 and convince yourself that you will find a way to repay the extra money. This just adds extra stress for no reason. Avoid overspending by only spending the money that you can afford. Even if you see something beautiful that you want to purchase, your pockets dictate whether you can afford it. Eventually when you leave the store, you will feel better that you did not overspend.

16) Find affordable accommodation to decrease housing problems

If you own your own house, you could decide to rent it out to generate cash for your financial problems or you can find a cheaper house to rent from. Brits love homes and talking about housing, but the costs of renting have become sky high especially in cities like Manchester and London. If housing is too expensive for you, consider finding flatmates that you can rent with to decrease the costs.

17) Make better decisions

Learning how to be a good decision maker is one of the most important steps in fixing financial problems. Being a decision maker that is stable is a solution to issues such as debts and missing loan repayments. For example, if you have received a £100 cash gift from a relative to spend how you wish, what is the first thing you do between the following three options:

a) Go on a shopping spree with your best friend

b) Put the £100 into a savings account

c) Use £100 to make loan repayments

Options b and c prove that you are trying to fix financial problems, while option a highlights that you do not realise the importance of using money correctly. If you are the type of person who would choose option a, you need to teach yourself to make better decisions so you would choose b and c. Better financial decisions erases financial problems and leads to happier lives.

18) Become a cash-only type of person

Be the type of person who only buys things with cash. If you only buy with cash, you will not go through financial issues such as making repayments on debt. Cash also focuses your buying decisions based on what you can afford to buy, instead of what you are dreaming of having. Get rid of big financial stresses by only using the cash that you have in your account to buy the things that you want.

19) Celebrate solving financial problems

Working hard to pay down debt or saving diligently to have a £10,000 pot should be commended. If you are being frugal at the moment to save, you could treat yourself to something special once you have achieved a personal financial goal. It’s important not to deprive yourself and enjoy what you have worked hard for especially if you have been focusing to solve financial problems that have been facing you. You can enjoy your money in a structured way so that you don’t end up becoming unhappy because you can’t buy what you want even though you can afford it.

Create your ideal financial future

Solving financial problems requires thinking long and hard about your goals. Everyone’s personal financial goals are different so it is important to only think about what you want to achieve. Once you know what your goals are, you can start eliminating your financial problems because your goals will drive you forward to achieve the perfect financial future. Are you ready to solve your financial problems? Read this detailed guide and start making steps today to take complete and total control of your personal finances.

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