6 Causes of Financial Problems and How You Can Solve Them

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So many Americans are trapped in debt and underfunded for retirement that one has to ask, “What is going on? Why are so many of us in such financial trouble?”

A lot of it isn’t our fault and is beyond our control, but we do need to get to the root of the money problems that we can control. So, it’s important to understand the causes of financial problems. What are they and how do they manifest? More importantly, how can we solve them?

Let’s figure it out.

Financial Illiteracy 

Financial literacy is gravely lacking in our society, and it’s causing big trouble in our financial lives.

“Remaining in the dark about certain financial factors will eventually lead you to be more exposed to countless financial problems,” said Clint Proctor, editor-in-chief of Investor Junkie

It may not be your fault that you lack financial literacy, but it is your responsibility to resolve it. You might want to hire a financial advisor for intensive one-on-one help, but you can also check out a growing list of books and podcasts to learn more.

Having a Negative Mindset 

Seeing the world through rose-colored glasses won’t solely guide you to financial success, but the reverse mindset can outright hurt you.

“Behind a lot of common financial issues is a disabling money mindset,” said Kelley Holland, a financial empowerment coach. “This can manifest as negative self-talk, like, ‘I’m hopeless with money’ or ‘I’ll never be able to retire.’ It can also show up as avoidance: Not opening bills that arrive, failing to track spending, or missing payment deadlines.”

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There are a few ways to tackle a negative money mindset including to challenge your beliefs and recognize your own strengths and past achievements.

“Consider whether your belief is accurate — or whether you really have strengths or experiences you can draw on to take charge of your finances,” Holland said. “For example, if you have had success adopting a fitness regimen, you can think about the reminders and motivators you drew on to make that happen.”

Getting Bad Advice From So-Called ‘Experts’

“Our current marketing landscape makes it hard for people to get trustworthy financial help,” said Josh Richner, marketing coordinator for National Legal Center. “Advertising platforms create new ways to target populations with aggressive ads, but the information isn’t always transparent or accurate. The more profitable the service is, the more the companies can afford to market it. That’s a catch-22 when we’re working with people who are struggling.”

To remedy this problem, Richner recommends that before making any major financial decision, you consult a non-profit credit counseling agency, a law firm familiar with ways to avoid bankruptcy and/or a credible financial advisor. 

“The key is to get multiple perspectives so you can make an informed decision that’s best for your unique financial situation,” Richner said.

Funding Your Grown Kids’ Lives 

“Helicopter parents [and] demanding children have created a generation of offspring that are not financially independent from their parents,” said Kathleen Owens, financial advisor at Aurora Financial Planning. “This is a very large societal problem.” 

To solve this problem in your own life, put your generosity in check and set boundaries with your kids to end the vicious cycle.

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“I have seen plenty of people in financial hot water over the years, and I have seen a variety of different root causes for their problems, but by far the most common root cause of financial problems in my experience is addiction,” said Ziga Breznik, owner and head of research at Public Finance International.

“Of course, drug addiction and gambling are amongst the most financially crippling, but it equally applies to alcohol and even things like smoking. You’d be surprised by how much debt a chain smoker can rack up when they’re on 40 a day. I’ve dealt with people who were spending $15,000 plus a year on cigarettes, and the worse thing was they were so addicted that they didn’t even realize just how much money they were sending up in smoke.”

The solution to this problem? Seek help to quit!


“A very common problem is when people are afraid to face their finances,” said Alex Caswell, a wealth planner at RHS Financial. “This causes issues such as under-saving, running into debt, missing investment opportunities and having an overall unhealthy and stressful relationship with money. They choose to not look at their bank statements, choose not to evaluate how much they are spending, and avoid making important decisions on their money due to fear of what they will find out.”

Dissolve your fear by taking baby steps to handle your financial life.

“Simple things such as reviewing your bank statement once a month can lead to budgeting,” Caswell said. “Start small and focus on building a good habit, then go bigger. Don’t be hard on yourself in the process. Understand that it won’t work right away, but with enough time and focus it will get better.”

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