Modernity
For many young people in developed economy, marriage means a drastic change in their standard of living. Either married or not, young people these days are accustomed to a standard of living that took their parents thirty years or more to create.
Entry level jobs are scarce and the pay is low compared to their parents' earnings. Buying a car in the U.S. for example is often a young person's first indebtedness because you can purchase them on credit. In addition, a young person moving away from home is taking a big economic step.
Many young people have financial problems because their basic necessities are likely to include things like television set, phones, computers, ipods, games, trendy clothes, shoes, jewelries, exotic decorations, designer cologne, perfumes, bags, rings, internet, washer and dryer, and so forth. Rather than postponing buying some buy on credit and find themselves trapped economically and freedom is lost.
People try to keep up with the Jones and eventually they are drowning in the sea of debt. Loan companies offer what appears to be the best way out of debt. They suggest that you can wipe out all your small debts by combining them in to one large package that reduces total monthly payment. Such a loan usually just pushes a person further into debt because of the high monthly payments.
Bankruptcy may be the only way out. Bankruptcy means that a person has slowly drowned in a rising sea of debt. Lower and middle class families are more likely to go bankrupt. A family's spending pattern is not likely to change after bankruptcy.
Caution
There are ways that you can tell if you are headed for bankruptcy, such as spending more than you make, not saving for a “rainy day,” making no plans for retirement, having many credit cards with a considerable balance, assets that are not liquid. You can never say no to your self when you see something you like, and you think that financial problems will take care of themselves and disappear.
Budgeting
A budget is a plan of spending to assure that what is needed and wanted is attained. Formal budgeting is likely to lead to financial independence. The first step is to allocate money for the necessities.
A budget should only be used for a specified time and then updated to reflect changing family circumstances.
Saving through wise spending
Let us learn from Dr. Cox who says “Wise spending is buying when an item is “on sale”, seeking out bargains, buying used instead of new, being aware of consumer traps, and studying seasonal price fluctuations. Individuals should do extensive research before purchasing “big ticket” items. Wise shoppers avoid consumer traps such as bait and switch, low ball, high ball, telemarketing, contest winner, free goods, hard sell, off brand items, home repairs, magazines, credit repair, travel, and advance fee loans.”
Thank you.
