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Money Basics  - Financial Problem Solving Strategies

Money basics  -, financial problem solving strategies, money basics financial problem solving strategies.

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Money Basics: Financial Problem Solving Strategies

Lesson 2: financial problem solving strategies.

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Financial problem-solving strategies

person carrying heavy weight with dollar sign

Have you ever experienced a financial problem? Do you feel like finances are holding you back from reaching your goals? This lesson will give a brief overview of the general problem-solving process and how to apply it to the most common financial problems.

The problem-solving process

First, let's take a look at a general problem-solving process that you can apply to any situation, not just a financial one.

  • Identify the problem . The first step in solving a problem is to identify it. What exactly do you need to overcome?
  • Make a plan. What are the steps you need to take in order to overcome the problem?
  • Implement the plan . This step actually puts the plan you created in place. While it sounds fairly straightforward, this is usually the most difficult step.
  • Evaluate the plan . Although this is listed last, this step might actually occur simultaneously with implementing the plan. Things happen and circumstances change, so you may need to re-evaluate your plan as it is happening.

Identifying the problem

credit report with low credit score of 360

The first step in the problem-solving process is to get to the root of the problem and understand what you need to overcome. Here is a list of the most common financial problems people may face:

  • Lack of income/job loss
  • Unexpected expenses
  • Too much debt
  • Need for financial independence
  • Overspending or lack of budget
  • Lack of savings

When thinking about these common problems, each one falls into one of three areas: You need more money, you need to reduce your debt, or you need to change how you spend.

Making a plan

After identifying the problem you need to overcome, it's time to make a plan. Not sure where to start? No worries! We have you covered with some tips and places to begin.

Problem 1: You need more money . Whether you've lost your job, met an unexpected expense, or are working on becoming more financially independent, a form of income is necessary.

If you are a looking for additional work or maybe just a better-paying job, take some time to update your resume and cover letter. Make sure they are neat, up to date with your most current information, and free of spelling and grammar errors.

Be wary of any advertisements or jobs that offer fast, easy money. A lot of quick-cash methods come with unintended consequences. More often than not, if something sounds too good to be true, it probably is.

Problem 2: You need to reduce your debt . With high interest rates or the need to live paycheck to paycheck, high debt can be debilitating. Sometimes it feels like climbing a neverending mountain with an invisible peak. However, by prioritizing and negotiating your debt, you can make it more manageable.

Try listing all of your debt and the interest rates associated with each. Focus on paying off the ones with the highest interest rates first. If you're having trouble making payments, call the loan company and see if it can offer any solutions for you. The company may be able to lower your interest rate or offer a temporary forbearance to help you get back on your feet. If you need more help tackling your debt, you may want to contact a professional debt counselor like Consolidated Credit.

Problem 3: You need to change how you spend . Going from financial problems to a healthy financial status often requires organization and a shift in thinking. Avoiding overspending, building your savings, and gaining financial independence can often be accomplished with good spending habits.

The first thing you may want to try is creating a budget. There are many templates and resources available to help you create one. Sticking to one can be challenging, but simply having a budget laid out can help you see where you need to start spending less.

In addition to your budget, create a savings plan. Start out small. Even stowing away an extra dollar or two here and there can make a big difference. Also, try placing your savings in a place you cannot easily access. For example, create a savings account at a bank you don't usually use. The more difficult it is to access your money, the less likely you are to spend it.

Implementing the plan

person on ladder climbing to metaphorical financial security

Although the explanation of this part is the simplest, this is often the most difficult part to actually execute. It requires self-discipline and perseverance. The most important part of this step is to know that if your plan doesn't work or if you have a difficult time sticking to it, all is not lost. If it happens, move on to the next step, evaluate your plan, then repeat the process.

Overcoming financial obstacles can require changing your lifestyle, and this does not happen overnight. However, just having a plan itself can help to give you confidence and reassurance that you can eventually overcome whatever is in your way.

Evaluating your plan

As you implement your plan, you'll need to continually evaluate it. Maybe something happens and your original plan needs to change. Perhaps you've learned more along the way and realize that your original plan was incomplete. Or maybe your first plan went as planned and was a success. No matter the circumstances, it is always a good idea to look back and re-evaluate. Try answering these questions:

  • Was your problem solved? Did a new problem arise?
  • What went right?
  • What went wrong?
  • What circumstances changed?
  • Was there anything you didn't account for?
  • What was easy about implementing your plan?
  • What was difficult about implementing your plan?

Financial obstacles can often seem debilitating and impossible to overcome. They often create a significant source of financial anxiety . We hope this lesson will help give you the confidence to take on your problem one step at a time so you can conquer your anxiety and move forward.

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Fix Your Financial Problems and Get Back on the Right Track

A monthly budget and a plan can be mighty tools

how to solve a financial problem

Budgeting Problems

Create a budget.

  • Track Your Spending

Budget Meetings

  • Spending Issues

If You Have Debt Problems

Debts in collections, find extra money.

  • Don't Add On
  • An Emergency Fund

Credit Problems

People face a wide variety of financial problems. The trouble might begin because you have a hard time or a distaste for budgeting, then it blooms from there into additional issues that can have serious implications.

The key might be as simple as taking the time to identify the source of the problem. You can begin to fix it from there and take control of your finances.

You might be having budgeting problems if you're consistently running out of money before you run out of month, and you find yourself relying on credit cards to make ends meet. You look at what you earn and wonder why it doesn't seem to be enough to cover all your bills even though you earn a good salary.

You might even have a written budget that you try to follow each month, but it never seems to work. This is a prime indicator that you have a budgeting problem. 

Start by creating a budget if you don't yet have one. The easiest way to do this is to look at what you spent in each category last month and adjust from there. Common budget categories include:

  • Housing (rent or mortgage)
  • Savings (emergency fund, sinking fund, and retirement)
  • Insurance (auto, health, and life)
  • Medical care
  • Transportation (car payment and/or commuting expenses)
  • Debt service (credit cards, personal loans, home equity loans, and other credit accounts - see our payment calculator below if you're considering one)
  • Health care
  • Discretionary spending (entertainment, dining out, and "extras")

You might have others that don't appear here, such as child care. Add them in.

Some of these expenses are fixed. They remain the same month after month. Others might fluctuate beyond your control — utility costs can vary by season, or maybe your child-care provider has upped its rates.

Still others, like discretionary spending and groceries, are within your control. You can spend less on these things if you have to.

Track Your Spending and Adjust as Necessary

Add up all the categories you've determined in your budget. You have some tweaking to do if the total is more than your monthly take-home pay. You'll have to cut somewhere, typically from those expenses that you have control over. You do not want to put less toward your savings or debt service if at all possible.

The key to making your budget work is realizing that it's flexible. You can take money from one category and use it in another category if you overspend. For example, you might splurge on concert tickets, but then you'll have to adjust your grocery budget to cover the extra you spent in your discretionary/entertainment category.

Budget meetings are essential if you're married and want to succeed financially. You and your spouse should communicate on a regular basis about the budget, and who's spending what and where.

Again, budgeting software can come in handy here because you can update it when you're shopping and it can prevent you from overspending when you're on separate errands.

Spending Issues: Stick to a List & Play the Waiting Game

Most people have an area in which they consistently overspend. You can address these "leaks" in your budget in a few ways.

  • Limit when you go "pleasure" shopping and don't take a credit card with you.
  • Create a menu plan , a grocery list and make meals ahead if you tend to spend too much money eating out. Stick to your list no matter what's on sale. If you didn't need steak or five bottles of cola when you were making your list, odds are that it hasn't become a must-buy just a few hours later.
  • Time is your friend when it comes to not spending needlessly. You might really, really want that classic bottle of bourbon today. Wait a month to buy it. You're not denying yourself. You're procrastinating. That little gift to yourself can be something like a reward if you find that you've really stuck to your budget at month's end.

You might also switch to the envelope budgeting system. This is basically a cash-only budget — or part of your budget — where you pay cash for your "controllable" categories like groceries and discretionary spending. Put the money you budgeted into an envelope for each category at the beginning of the month and stop spending in that category when the envelope is empty. You might realize that you think twice about dipping into an envelope if you consider that doing so now might empty it out before the month is up.

Too much debt can be crippling. Address this issue as quickly as possible because you won't be able to get ahead financially if you're carrying a large amount of debt.

Consider creating a debt payment plan. List your debts in order of the smallest balance to the largest, or the highest interest rate to the lowest interest rate. This is the order in which you're going to pay them off.

Take the money you were paying toward the first and add it to the payments you're making on the second debt after you've paid the first one off. Continue rolling the money over until you've paid off everything.

But avoid closing credit cards as you pay them off because this can lower your credit score. Part of your score depends on how long you've been borrowing, so closing a card that you've hard for a while can cost you some points. You should always leave at least your oldest card open, ideally with a very minimal or zero balance.

You can often settle debts that have gone to collections by paying less than you actually owe. The creditor will "forgive" or write off the balance.

It's all about negotiation. Call the creditor, start with a low amount and offer a one-time payment. Maybe you owe $3,000. Offer to remit $1,500 right now if possible, if the creditor will "erase" that remaining $1,500 balance. The credit might counter with $2,000. Keep trying.

Do not give the creditor access to your checking account over the phone. Send a cashier’s check by certified mail once you've received a letter confirming your deal and keep a copy of that letter in case there's a question later on.

You might be responsible for paying income taxes on any debt that's forgiven. You could receive an IRS Form 1099-C from the creditor, and a copy is sent to the Internal Revenue Service as well, showing how much of your debt was erased. You must generally report this amount as taxable income on your tax return.

Check with a tax professional to be sure before you report this money on your tax return. You might not receive one at all because these forms generally apply to $600 or more of canceled debt.  

You can begin moving forward more quickly if you can get your hands on some extra money to pay off your debts. You might consider selling items you no longer use or look in your budget for things you can cut out without feeling the pain too much.

You might want to consider cutting your cable or cellphone service back to a less expensive package. You might be surprised at just how much you can pay off if you sacrifice a bit of your lifestyle for a while.

Another option is to take on a second job. In fact, you might want to try a combination of all three approaches if you're serious about conquering your debt.

Don't Add On

There's no point in working to get out of debt if you continually add onto it each month. Stop using your credit cards as much as possible. You're effectively just treading water if you make payments then turn around and charge right back up to your previous balance.

Don't Forget That Emergency Fund

Budgeting gurus came up with the concept of an emergency fund for good reason. Maybe life is moving along nicely, then the company you work for goes out of business. You're out of work through no fault of your own. Or maybe you're crossing the street when a taxi hits you. You're out of work while you recuperate and you might have uninsured medical expenses as well.

Having some cash stashed away in an  emergency fund might not save the day entirely, but life will be a lot easier than it would have been if you hadn't saved for the unexpected.

It's recommended that you have at least three months' living expenses set aside, and some experts say six months. Yes, that can be an intimidating number if your monthly nut is $3,500 or more. Start small if you must, but start. You'll get there eventually and you might be glad you did.

Credit problems can make it difficult to land a job, rent an apartment, or buy a home. Poor or even iffy credit can affect the interest rates on your car loan and negatively affect your finances. Understand how your credit works so you can identify why your credit score is low and start to fix it.

Two common culprits are making late payments and maxing out credit cards. Paying a week or two late might not ding your score too horribly, but paying 30 days late — or even worse, 60 — can deal it a serious blow.  

Your credit utilization ratio is also critical to your credit score. Ideally, you'll want to keep it at less than 30%. This means that your total balances add up to no more than $3,000 if you have credit limits of $10,000.

Internal Revenue Service. " About Form 1099-C, Cancellation of Debt ."

Experian. " Can One 30-Day Late Payment Hurt Your Credit? "

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6 ways to tackle financial stress

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For many Americans, financial concerns are ever present, especially given the uncertainties of today’s economy. While worrying doesn’t solve much, having a plan to manage financial challenges can help ease some of the stress. Plus, the monetary benefits of dealing with financial problems—paying off bills, saving more and reducing debt—can help improve your overall outlook. Here are some suggestions for tackling your money stress and taking control of your finances.

Identify top sources of financial stress

If financial anxiety is weighing on you, start by identifying the specific issues keeping you up at night. Whether the problem is credit card debt or upcoming bill payments, pinpointing the source of your stress will help you determine your next move .

Create a monthly budget

A budget is a powerful tool for taking control of—and understanding—your finances. It can help you avoid spending more than you have as well as save for future goals. Once you have a full picture of where your money is going every month, you can look for opportunities to redirect some of it to the areas causing your financial stress.

There are lots of apps and online tools to help you track spending or set up a budget. If you have an account with Bank of America, consider using the Spending & Budgeting tool .

Make the most of your income

When money is tight, you may think you don’t have enough to deal with your financial problems. However, it’s important to make the most of the income you do have. Know that small steps add up. You may not be able to cut any one expense by $500 a month, but you may be able to identify five that you can cut by $100 each.

Article continues below

Build an emergency fund.

Having money set aside for an emergency—such as car repairs, job loss or illness—can go a long way towards relieving financial anxiety. However, building an emergency fund can seem overwhelming, especially one with enough to cover three to six months of expenses. Don’t get hung up on the amount—what’s important is that you’re consistently setting money aside.

Bank of America offers a Savings Calculator to help you see how much time it could take to hit your savings goal.

Be strategic about reducing debt.

Credit card debt is a common source of financial stress. Not only is it expensive—it can also get in the way of your savings goals. The anxiety antidote: a plan to pay off the debt . If you have balances on multiple cards, consider using the snowball method (paying off your debts one-by-one, focusing on the smallest first) or the high-rate method (concentrating on the cards with the highest interest rates first).

Consider outside help

how to solve a financial problem

If you’re not satisfied with your progress in reducing debt, you may want to seek help from trusted resources, such as the Federal Trade Commission and the National Foundation for Credit Counseling. Or if you want guidance on long-term goals, such as saving for retirement or college, financial advisors can help. Finally, your friends and family may be able to offer support—just make sure to set clear boundaries and expectations to avoid damaging those relationships.

The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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Understanding financial stress

Effects of financial stress on your health, tip 1: talk to someone, tip 2: take inventory of your finances, tip 3: make a plan—and stick to it, tip 4: create a monthly budget, tip 5: manage your overall stress, coping with financial stress.

Feeling overwhelmed by money worries? Whatever your circumstances, there are ways to get through these tough economic times, ease stress and anxiety, and regain control of your finances.

how to solve a financial problem

If you’re worried about money, you’re not alone. Many of us, from all over the world and from all walks of life, are having to deal with financial stress and uncertainty at this difficult time. Whether your problems stem from a loss of work, escalating debt, unexpected expenses, or a combination of factors, financial worry is one of the most common stressors in modern life. Even before the global coronavirus pandemic and resulting economic fallout, an American Psychological Association (APA) study found that 72% of Americans feel stressed about money at least some of the time. The recent economic difficulties mean that even more of us are now facing financial struggles and hardship.

Like any source of overwhelming stress, financial problems can take a huge toll on your mental and physical health, your relationships, and your overall quality of life. Feeling beaten down by money worries can adversely impact your sleep, self-esteem, and energy levels. It can leave you feeling angry, ashamed, or fearful, fuel tension and arguments with those closest to you, exacerbate pain and mood swings, and even increase your risk of depression and anxiety. You may resort to unhealthy coping mechanisms, such as drinking, abusing drugs, or gambling to try to escape your worries. In the worst circumstances, financial stress can even prompt suicidal thoughts or actions. But no matter how hopeless your situation seems, there is help available. By tackling your money problems head on, you can find a way through the financial quagmire, ease your stress levels, and regain control of your finances—and your life.

While we all know deep down there are many more important things in life than money, when you’re struggling financially fear and stress can take over your world. It can damage your self-esteem, make you feel flawed, and fill you with a sense of despair. When financial stress becomes overwhelming, your mind, body, and social life can pay a heavy price.

[Read: Stress Symptoms, Signs, and Causes]

Financial stress can lead to:

Insomnia or other sleep difficulties. Nothing will keep you tossing and turning at night more than worrying about unpaid bills or a loss of income.

Weight gain (or loss). Stress can disrupt your appetite, causing you to anxiously overeat or skip meals to save money.

Depression. Living under the cloud of money problems can leave anyone feeling down, hopeless, and struggling to concentrate or make decisions. According to a study at the University of Nottingham in the UK, people who struggle with debt are more than twice as likely to suffer from depression .

Anxiety. Money can be a safety net; without it, you may feel vulnerable and anxious. And all the worrying about unpaid bills or loss of income can trigger anxiety symptoms such as a pounding heartbeat, sweating, shaking, or even panic attacks.

Relationship difficulties. Money is often cited as the most common issue couples argue about. Left unchecked, financial stress can make you angry and irritable, cause a loss of interest in sex, and wear away at the foundations of even the strongest relationships .

Social withdrawal. Financial worries can clip your wings and cause you to withdraw from friends, curtail your social life, and retreat into your shell—which will only make your stress worse.

Physical ailments such as headaches, gastrointestinal problems, diabetes, high blood pressure , and heart disease. In countries without free healthcare, money worries may also cause you to delay or skip seeing a doctor for fear of incurring additional expenses.

Unhealthy coping methods , such as drinking too much , abusing prescription or illegal drugs, gambling, or overeating. Money worries can even lead to self-harm or thoughts of suicide.

If you are feeling suicidal…

Your money problems may seem overwhelming and permanent right now. But with time, things will get better and your outlook will change, especially if you get help. There are many people who want to support you during this difficult time, so please reach out!

Read Are You Feeling Suicidal? , call 1-800-273-TALK in the U.S., or find a helpline in your country at IASP or Suicide.org .

The vicious cycle of poor financial health and poor mental health

A number of studies have demonstrated a cyclical link between financial worries and mental health problems such as depression, anxiety, and substance abuse.

Financial problems adversely impact your mental health. The stress of debt or other financial issues leaves you feeling depressed or anxious.

The decline in your mental health makes it harder to manage money. You may find it harder to concentrate or lack the energy to tackle a mounting pile of bills. Or you may lose income by taking time off work due to anxiety or depression.

These difficulties managing money lead to more financial problems and worsening mental health problems, and so on. You become trapped in a downward spiral of increasing money problems and declining mental health.

No matter how bleak your situation may seem at the moment, there is a way out. These strategies can help you to break the cycle, ease the stress of money problems, and find stability again.

When you’re facing money problems, there’s often a strong temptation to bottle everything up and try to go it alone. Many of us even consider money a taboo subject, one not to be discussed with others. You may feel awkward about disclosing the amount you earn or spend, feel shame about any financial mistakes you’ve made, or embarrassed about not being able to provide for your family. But bottling things up will only make your financial stress worse. In the current economy, where many people are struggling through no fault of their own, you’ll likely find others are far more understanding of your problems.

[Read: Social Support for Stress Relief]

Not only is talking face-to-face with a trusted friend or loved one a proven means of stress relief, but speaking openly about your financial problems can also help you put things in perspective. Keeping money worries to yourself only amplifies them until they seem insurmountable. The simple act of expressing your problems to someone you trust can make them seem far less intimidating.

  • The person you talk to doesn’t have to be able to fix your problems or offer financial help.
  • To ease your burden, they just need to be willing to talk things out without judging or criticizing.
  • Be honest about what you’re going through and the emotions you’re experiencing.
  • Talking over your worries can help you make sense of what you’re facing and your friend or loved one may even be able to come up with solutions that you hadn’t thought of alone.

Getting professional advice

Depending on where you live, there are a number of organizations that offer free counseling on dealing with financial problems, whether it’s managing debt, creating and sticking to a budget, finding work, communicating with creditors, or claiming benefits or financial assistance. (See the “Get more help” section below for links).

Whether or not you have a friend or loved one to talk to for emotional support, getting practical advice from an expert is always a good idea. Reaching out is not a sign of weakness and it doesn’t mean that you’ve somehow failed as a provider, parent, or spouse. It just means that you’re wise enough to recognize your financial situation is causing you stress and needs addressing.

Speak to a Licensed Therapist

BetterHelp is an online therapy service that matches you to licensed, accredited therapists who can help with depression, anxiety, relationships, and more. Take the assessment and get matched with a therapist in as little as 48 hours.

Opening up to your family

Financial problems tend to impact the whole family and enlisting your loved ones’ support can be crucial in turning things around. Even if you take pride in being self-sufficient, keep your family up to date on your financial situation and how they can help you save money.

Let them express their concerns. Your loved ones are probably worried—about both you and the financial stability of your family unit. Listen to their concerns and allow them to offer suggestions on how to resolve the financial problems you’re facing.

Make time for (inexpensive) family fun. Set aside regular time where you can enjoy each other’s company, let off steam, and forget about your financial worries. Walking in the park, playing games, or exercising together doesn’t have to cost money but it can help ease stress and keep the whole family positive.

If you’re struggling to make ends meet, you may think you can ease your stress by leaving bills unopened, avoiding phone calls from creditors, or ignoring bank and credit card statements. But denying the reality of your situation will only make things worse in the long run. The first step to devising a plan to solve your money problems is to detail your income, debt, and spending over the course of at least one month.

A number of websites and smartphone apps can help you keep track of your finances moving forward or you can work backwards by gathering receipts and examining bank and credit card statements. Obviously, some money difficulties are easier to solve than others, but by taking inventory of your finances you’ll have a much clearer idea of where you stand. And as daunting or painful as the process may seem, tracking your finances in detail can also help you start to regain a much-needed sense of control over your situation.

Include every source of income. In addition to any salary, include bonuses, benefits, alimony, child support, or any interest you receive.

Keep track of ALL your spending. When you’re faced with a pile of past-due bills and mounting debt, buying a coffee on the way to work may seem like an irrelevant expense. But seemingly small expenses can mount up over time, so keep track of everything. Understanding exactly how you spend your money is key to budgeting and devising a plan to address your financial problems.

List your debts. Include past-due bills, late fees, and list minimum payments due as well as any money you owe to family or friends.

Identify spending patterns and triggers. Does boredom or a stressful day at work cause you to head to the mall or start online shopping? When the kids are acting out, do you keep them quiet with expensive restaurant or takeout meals, rather than cooking at home ? Once you’re aware of your triggers you can find healthier ways of coping with them than resorting to “retail therapy”.

Look to make small changes. Spending money on things like a morning newspaper, lunchtime sandwich, or break-time cigarettes can add up to a significant monthly outlay. While it may be unreasonable to deny yourself every small pleasure, cutting down on nonessential spending and finding small ways to reduce your daily expenditure can really help to free up extra cash to pay off bills.

Eliminate impulse spending. Ever seen something online or in a shop window that you just had to buy? Impulsive buying can wreck your budget and max out your credit cards. To break the habit, try making a rule that you’ll wait a week before making any new purchase.

Go easy on yourself. As you review your debt and spending habits, remember that anyone can get into financial difficulties, especially at times like this . Don’t use this as an excuse to punish yourself for any perceived financial mistakes. Give yourself a break and focus on the aspects you can control as you look to move forward.

When your financial problems go beyond money

Sometimes, the causes for your financial difficulties may lie elsewhere. For example, money troubles can stem from problem gambling , fraud abuse , or a mental health issue, such as overspending during a bipolar manic episode .

To prevent the same financial problems recurring, it’s imperative you address both the underlying issue and the money troubles it’s created in your life.

Just as financial stress can be caused by a wide range of different money problems, so there are an equally wide range of possible solutions. The plan to address your specific problem could be to live within a tighter budget, lower the interest rate on your credit card debt, curb your online spending, seek government benefits, declare bankruptcy, or to find a new job or additional source of income.

If you’ve taken inventory of your financial situation, eliminated discretionary and impulse spending, and your outgoings still exceed your income, there are essentially three choices open to you: increase your income, lower your spending, or both. How you go about achieving any of those goals will require making a plan and following through on it.

  • Identify your financial problem. Having taken inventory, you should be able to clearly identify the financial problem you’re facing. It may be that you have too much credit card debt, not enough income, or you overspend on unnecessary purchases when you feel stressed or anxious. Or perhaps, it’s a combination of problems. Make a separate plan for each one.
  • Devise a solution. Brainstorm ideas with your family or a trusted friend, or consult a free financial counseling service. You may decide that talking to credit card companies and requesting a lower interest rate would help solve your problem. Or maybe you need to restructure your debt, eliminate your car payment, downsize your home, or talk to your boss about working overtime.
  • Put your plan into action. Be specific about how you can follow through on the solutions you’ve devised. Perhaps that means cutting up credit cards, networking for a new job , registering at a local food bank, or selling things on eBay to pay off bills, for example.
  • Monitor your progress. As we’ve all experienced recently, events that impact your financial health can happen quickly, so it’s important to regularly review your plan. Are some aspects working better than others? Do changes in interest rates, your monthly expenses, or your hourly wage, for example, mean you should revise your plan?
  • Don’t get derailed by setbacks. We’re all human and no matter how tight your plan, you may stray from your goal or something unexpected could happen to derail you. Don’t beat yourself up, but get back on track as soon as possible.

The more detailed you can make your plan, the less powerless you’ll feel over your financial situation.

Whatever your plan to relieve your financial problems, setting and following a monthly budget can help keep you on track and regain your sense of control.

  • Include everyday expenses in your budget, such as groceries and the cost of traveling to work, as well as monthly rent, mortgage, and utility bills.
  • For items that you pay annually, such as car insurance or property tax, divide them by 12 so you can set aside money each month.
  • If possible, try to factor in unexpected expenses, such as a medical co-pay or prescription charge if you fall sick, or the cost of home or car repairs.
  • Set up automatic payments wherever possible to help ensure bills are paid on time and you avoid late payments and interest rate hikes.
  • Prioritize your spending. If you’re having trouble covering your expenses each month, it can help to prioritize where your money goes first. For example, feeding and housing yourself and your family and keeping the power on are necessities. Paying your credit card isn’t—even if you’re behind on your payments and have debt collection companies harassing you.
  • Keep looking for ways to save money. Most of us can find something in our budget that we can eliminate to help make ends meet. Regularly review your budget and look for ways to trim expenses.
  • Enlist support from your spouse, partner, or kids. Make sure everyone in your household is pulling in the same direction and understands the financial goals you’re working towards.

Resolving financial problems tends to involve small steps that reap rewards over time. In the current economic climate, it’s unlikely your financial difficulties will disappear overnight. But that doesn’t mean you can’t take steps right away to ease your stress levels and find the energy and peace of mind to better deal with challenges in the long-term.

[Read: Stress Management]

Get moving. Even a little regular exercise can help ease stress, boost your mood and energy, and improve your self-esteem. Aim for 30 minutes on most days, broken up into short 10-minute bursts if that’s easier.

Practice a relaxation technique. Take time to relax each day and give your mind a break from the constant worrying. Meditating , breathing exercises, or other relaxation techniques are excellent ways to relieve stress and restore some balance to your life.

Don’t skimp on sleep. Feeling tired will only increase your stress and negative thought patterns. Finding ways to improve your sleep during this difficult time will help both your mind and body.

Boost your self-esteem. Rightly or wrongly, experiencing financial problems can cause you to feel like a failure and impact your self-esteem. But there are plenty of other, more rewarding ways to improve your sense of self-worth. Even when you’re struggling yourself, helping others by volunteering can increase your confidence and ease stress, anger, and anxiety—not to mention aid a worthy cause. Or you could spend time in nature, learn a new skill, or enjoy the company of people who appreciate you for who you are, rather than for your bank balance.

Eat healthy food. A healthy diet rich in fruit, vegetables, and omega-3s can help support your mood and improve your energy and outlook. And you don’t have to spend a fortune; there are ways to eat well on a budget .

Be grateful for the good things in your life. When you’re plagued by money worries and financial uncertainty , it’s easy to focus all your attention on the negatives. While you don’t have to ignore reality and pretend everything’s fine, you can take a moment to appreciate a close relationship, the beauty of a sunset, or the love of a pet, for example. It can give your mind a break from the constant worrying, help boost your mood, and ease your stress.

Find financial resources

Find  U.S. Government Services and Information  including  How to Get Out of Debt ,  Unemployment Help , and  Getting Help with Living Expenses . Or call 1-844-872-4681. (USA gov)

Get help with debt and housing problems from  Citizens Advice , contact a free debt service at  National Debtline  or  Stepchange , or seek free financial advice from the government’s  Money Advice Service .

Find  Government Services , get free  Financial Counselling  or call the  National Debt Helpline  at 1800 007 007.

Find government services and information for  Managing Debt  and  Benefits .

More Information

  • Managing Job Loss and Financial Stress - Helping yourself and your family cope with stress and financial worries following job loss. (University of Hawaii)
  • Managing Debt - Steps you can take to deal with debt. (Federal Trade Commission)
  • Managing money and budgeting - Tips for creating a family budget. (raisingchildren.net.au)
  • Make a Budget - Simple worksheet to help you create a budget. (Federal Trade Commission)
  • Money Stress Weighing on Americans’ Health - Details of the 2015 Stress in America: Paying with Our Health survey from the American Psychological Association. (APA)
  • Trauma- and Stressor-Related Disorders. (2013). In Diagnostic and Statistical Manual of Mental Disorders . American Psychiatric Association. Link
  • Inc, Gallup. “The U.S. Healthcare Cost Crisis.” Gallup.com. Accessed November 16, 2021. Link
  • Anderson, Norman B, Cynthia D Belar, Steven J Breckler, Katherine C Nordal, David W Ballard, Lynn F Bufka, Luana Bossolo, Sophie Bethune, Angel Brownawell, and Katelynn Wiggins. Stress in America: Paying with our Health. “AMERICAN PSYCHOLOGICAL ASSOCIATION,” n.d., 23. Link
  • Ramsey Solutions. “Money, Marriage, and Communication.” Accessed November 16, 2021. Link
  • “At What Costs? Student Loan Debt, Debt Stress, and Racially/Ethnically Diverse College Students’ Perceived Health. – PsycNET.” Accessed November 16, 2021. Link
  • Richardson, Thomas, Peter Elliott, and Ronald Roberts. “The Relationship between Personal Unsecured Debt and Mental and Physical Health: A Systematic Review and Meta-Analysis.” Clinical Psychology Review 33, no. 8 (December 1, 2013): 1148–62. Link
  • Warth, Jacqueline, Marie-Therese Puth, Judith Tillmann, Johannes Porz, Ulrike Zier, Klaus Weckbecker, and Eva Münster. “Over-Indebtedness and Its Association with Sleep and Sleep Medication Use.” BMC Public Health 19, no. 1 (July 17, 2019): 957. Link
  • Saleh, Dalia, Nathalie Camart, Fouad Sbeira, and Lucia Romo. “Can We Learn to Manage Stress? A Randomized Controlled Trial Carried out on University Students.” PLOS ONE 13, no. 9 (September 5, 2018): e0200997. Link
  • “Stress, Social Support, and the Buffering Hypothesis. – PsycNET.” Accessed November 15, 2021. Link
  • Salmon, P. “Effects of Physical Exercise on Anxiety, Depression, and Sensitivity to Stress: A Unifying Theory.” Clinical Psychology Review 21, no. 1 (February 2001): 33–61. Link
  • Toussaint, Loren, Quang Anh Nguyen, Claire Roettger, Kiara Dixon, Martin Offenbächer, Niko Kohls, Jameson Hirsch, and Fuschia Sirois. “Effectiveness of Progressive Muscle Relaxation, Deep Breathing, and Guided Imagery in Promoting Psychological and Physiological States of Relaxation.” Evidence-Based Complementary and Alternative Medicine 2021 (July 3, 2021): e5924040. Link

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How to Get Out of Financial Trouble

Last Updated: May 19, 2023 References

This article was co-authored by Michael R. Lewis . Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. He has over 40 years of experience in business and finance, including as a Vice President for Blue Cross Blue Shield of Texas. He has a BBA in Industrial Management from the University of Texas at Austin. This article has been viewed 123,055 times.

Financial trouble can strike suddenly and can come from a variety of sources. Perhaps you lose your job, suddenly find yourself in credit card debt, or lose it all on an investment gone wrong. In any case, the most important thing you can do is stop and think to identify the problem and plan a way out of it. By doing so, you can immediately get started on the path towards regaining your financial security.

Planning a Way Out

Step 1 Determine the source of your troubles.

  • Make a list of your biggest financial problems. Remember that you do not need to fix everything at once. Instead, try to prioritize the items on your list, such as paying off a major source of debt or finding a job. The rest of your financial woes will be easier to solve once the major ones are out of the way.
  • After you have identified and prioritized your financial problems, try setting a goal date for solving each one. [1] X Research source For example, you might give yourself until the end of the month to find a job or make it your goal to pay off your largest source of debt within two years.
  • If you are married or in a long-term relationship, then make sure that you involve your spouse or partner in this process as well.

Step 2 Develop a list of solutions.

  • For example, if your goal is to pay off a large credit card debt within two years, then you will need to calculate how much to pay each month and be consistent with those payments. You will also need to avoid using the credit card if the account is still open.
  • If your goal is to find a job, then you might list solutions such as search job postings daily, submit 10 applications per week, or call after a week if you have not heard back.

Step 3 Review your debts...

  • However, if the issue is simply that you can't pay your debt, you can try to set up a new payment schedule with your creditors. Odds are they prefer giving you more time to repay your debt to potentially receiving nothing when you file for bankruptcy. So, call them, explain your situation, and negotiate a new repayment schedule. [2] X Research source

Step 4 Make a budget....

  • Examine your spending. Odds are, there are some areas in which you are overspending. Take a hard look at your expenses (food, living expenses, car, entertainment, etc.) and try to find areas where you are spending more money than you need to be. Maybe you buy lunch every day when you could be packing a lunch instead, or perhaps you buy books instead of renting them for free from the library. Make a plan to reduce your expenses as much as possible to reduce your financial burden.
  • For instructions on how to create a budget spreadsheet, see how to make a personal budget on Excel.

Step 5 Get your family on board.

Executing Your Plan

Step 1 Stick to your budget.

  • For more information, read how to live on practically nothing.

Step 3 Let someone else help keep you accountable.

  • Start by finding a person, like a family member or close friend.
  • Let this person know about your financial goals, what steps you're taking to get out of financial trouble, and your timeline for doing so.
  • Call this person regularly (weekly or monthly) to talk about how your plans are going. [7] X Research source

Step 4 Save your money on payday.

  • If you really see no other way out, you can file for bankruptcy. Just know that doing so will destroy your credit score and require months of legal proceedings.

Staying Out of Financial Trouble

Step 1 Continue your money-saving habits when your debts are paid.

Expert Q&A

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5 Easy Ways to Take Control of Your Personal Finances

  • Kiara Taylor

how to solve a financial problem

Managing your money doesn’t have to be overwhelming.

Don’t let your finances stress you out to the point of inaction. Instead, take back control by following the steps below:

  • Start budgeting. But here’s the key: Don’t use your budget to set unrealistic goals about how much you are going to save and how much extra money you will earn. Instead, aim to make it an accurate description of how your finances work. See where you could be spending more or spending less.
  • Create an emergency fund. Putting aside $50 a month can really add up. You should aim to have at least $1,000 in your fund until you are out of debt.
  • Be honest with yourself. The financial gap resulting in your debt might be caused by a number of factors – you may not be earning enough, or you may be spending too much. You need to name the problem to figure out the right long term solution.
  • Ask for help. There are plenty of services out there that can help you take back control — from financial planning services to debt management advisors to credit counseling services.

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Where your work meets your life. See more from Ascend here .

The last year has been a very difficult one. Not only have we had to deal with travel restrictions, lockdown orders, and fears of getting sick — many of us have also been struggling financially.  In fact, research suggests that financial stress is at an all-time high in America, a phenomenon explained by the numerous hiring freezes and layoffs brought on by the pandemic. 

how to solve a financial problem

  • KT Kiara Taylor has more than 10 years of experience in finance, ranging from fixed income to emerging markets. She enjoys writing on the impact of both micro and macro trends on global finance, and has contributed to Investopedia , The Balance , and Crunchbase .

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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money .

Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

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From recent high-profile bank failures to sky-high inflation and worries of a recession, many consumers are coping with financial stress as they try and keep their money safe, plan for the future and simply try to make ends meet.

In fact, more than half (52 percent) of adults say money has a negative impact on their mental health at least occasionally, according to Bankrate’s 2023 Money and Mental Health Survey . Among those impacted by money worries, almost one-third (29 percent) worry every single day.

While financial stress can often be attributed to external factors, there are ways you can mitigate it and take steps to improve your financial security. Here are seven steps to help you manage financial stress during trying times.

Impact of financial issues on mental health

  • More than half (52 percent) of adults say money has a negative impact on their mental health at least occasionally.
  • Women are significantly more likely than men to say money negatively impacts their mental health (56 percent versus 47 percent).
  • Gen Xers (ages 43-58) are the most concerned, since 60 percent say money negatively impacts their mental health, compared with 55 percent of millennials (ages 27-42), 52 percent of Gen Zers (ages 18-26) and 45 percent of baby boomers (ages 59-77).
  • More than one-third (35 percent) of those with annual household incomes under $50,000 who say their mental health is negatively impacted by money matters say this happens every day. That figure falls to 29 percent in households that earn between $50,000 and $79,999, 21 percent in households that earn between $80,000 and $99,999 and 23 percent in households that earn more than $100,000.
  • Inflation is the top money worry that has grown over the past year. More than half (57 percent) of those whose mental health is negatively impacted by money concerns said this issue has worsened over the past year.

1. Prioritize what you can control on discretionary spending

You probably can’t change everything that’s causing you stress. Focus instead of what you can control so you can improve your situation. For instance, consider your food budget. Look for ways to shave a few dollars off your grocery bill , like comparing prices on different brands. You’ll not only save money, but the feeling of accomplishment and being in control may help reduce your stress as well.

Lowering your food bills can really impact your budget, since food prices are expected to increase 6.5 percent in 2023, according to the U.S. Department of Agriculture . One simple way to save on groceries is to buy store brands over name brands. Store-brand groceries tend to run around 40 percent cheaper than name brands, according to CNET research .

2. Find ways to earn more money

You can only cut a budget so far, and you’ll want to be careful that your tight budget doesn’t become a source of additional stress. With the price of consumer goods being higher than normal, line items in your budget are likely already under strain.

It might be worth looking for ways to increase your income instead. Some ways to do so include:

  • Work a few extra hours: Try talking to your employer about putting in some extra time each week, if you’re paid hourly or at least eligible for overtime pay.
  • Negotiating for a raise: Given high inflation and a tight labor market, employers may be more willing to grant a pay increase.
  • Selling items you no longer need: This can include things such as old furniture, clothing, toys, pet items and tools.
  • Taking on a side gig : A side gig can be a good option for those who want a flexible way to pad their income alongside a full-time job. This can include things like delivering food, tutoring or running a blog. The money can really add up, considering the monthly average and median income from side hustles in 2022 was $996 and $400, respectively, according to a Bankrate survey .

3. Pay essential bills

A majority of employed Americans (55 percent) say their income has not kept up with the increase in household expenses due to inflation , a recent Bankrate survey found. If you’re worried about being able to pay all your bills, prioritize essential bills first. Sorting through your bills and prioritizing them serves multiple purposes:

  • Thinking through what you spend your money on can help you identify some bills that can be eliminated or reduced.
  • Deciding in advance which bills you need to prioritize can help ensure you set aside enough money to pay them on time.

Paying close attention to your bills and prioritizing them will help reduce your financial anxiety and hopefully allow you to sleep better.

Some service providers and lenders may allow for payment extensions, which give you extra time to pay your bill. This can come in handy during a time of financial hardship. It’s important to read the terms of any extension agreement to understand whether associated fees will be charged and how the extension impacts any interest accrued.

4. Save money during trying times

It’s often hard to consistently save money, especially if you’re struggling just to make ends meet. In fact, 74% say economic factors, including inflation, rising interest rates, and change in income/employment, are causing them to save less right now, Bankrate found .

Following a savings plan and building up your emergency fund will not only help you feel more in control, but it will also relieve some stress.

Shopping around for the best high-yield savings account is worth your time, considering these accounts often earn exponentially higher yields than the near-zero rates commonly offered at big banks.

Many consumers continue to earn lackluster rates on their savings accounts, however. Only around 1 in 5 Americans (22 percent) with short-term savings say they’re earning a yield that’s 3 percent or higher, according to Bankrate’s Online Savings Survey . Nearly a quarter (24 percent) earn mediocre annual percentage yields (APYs) of 1 to 2.99 percent, while the same percentage (24 percent) report earning a rock-bottom APY of less than 1 percent and 16 percent say they’re earning no interest whatsoever.

If you want to contribute a certain amount to your savings each month, you can set up an automatic transfer from your checking account .

Once you’ve built an emergency fund, you may want to put any extra savings into a certificate of deposit (CD) . In exchange for keeping the money in the account for a set time frame, you’ll earn a guaranteed return rate that may be higher than traditional savings accounts.

Other places to save your money include money market accounts, cash management accounts and individual retirement accounts (IRAs).

5. Track your money-saving progress

You won’t really know if you’re making progress if you don’t track it. Make sure you know where you stand.

“Do the work to figure out your exact financial situation,” says Tracey Bissett, president at Bissett Financial Fitness. Tracking your progress lets you know whether the actions you’re taking are moving the needle.

Tracking your progress in adding to your emergency fund over time can have a positive impact on your wellbeing. Of all U.S. adults who say concerns about money have negatively impacted their mental health, 41 percent say not enough emergency savings has caused an increase in concern over the past year, Bankrate found in its Money and Mental Health Survey.

“Having good financial health and a positive mindset is really all about understanding your opportunities, your options and how your money is working for you,” says Cara Macksoud, a certified financial behavior specialist and CEO of Money Habitudes, a financial personality assessment provider.

“If you don’t have a positive mindset currently, understanding your finances will let you know what story your money is telling, and that may be the check-in that helps you begin to have a positive mindset around money,” Macksoud says.

Bankrate’s savings calculator is a handy way to determine how soon you can reach a financial goal based on how much you save every month. Another resource, Bankrate’s Magnify My APY , helps you determine your current savings rate, compare other rates, and see how much more you can earn with a higher APY.

6. Talk to your lenders

Debt can be both a financial and mental burden. Before you let debt and the stress it causes overwhelm you, talk to your lenders.

“Always remember that lenders are often open to discussing your issues and finding at least a short-term solution,” says Anna Barker, personal finance expert and founder of personal finance website LogicalDollar.

The lender may be willing to make a modification on the loan, such as extending its term or lowering the interest rate, to reduce your monthly payments. You could also try refinancing .

7. Consult with an expert financial advisor

Consider talking to a financial advisor to help take some of the weight off your shoulders when it comes to things like setting goals, saving money and decreasing debt.

Working with a financial advisor on aspects that include financial planning and investment selection can add around 3 percent to your portfolio annually, based on research by consulting group Envestnet | PMC .

“In times of stress, a financial advisor should be there to validate your feelings [and also] show you why you should feel calm with the plan you have in place,” says Money Habitudes’ Macksoud. “If you have a longer-term relationship with an advisor, the greatest part of that is you can see where you were, where you are, and where you’re going. And if you’re still on track, even with market uncertainty as it is, you should find peace with the diversification you have.”

Bottom line

Financial stress and anxiety are common nowadays, whether you’re struggling to make ends meet due to inflation or you’re worried about the safety of your money in the bank after several high-profile bank failures.

Though it will take some effort, you can work to stay ahead of expenses and curb financial worries. This can be accomplished through steps like creating a budget and tracking your savings progress. Also, don’t hesitate to reach out to a financial advisor or a trusted friend or relative for advice.

Various online resources are available for free to help you save money, spend wisely and live within your means. Bankrate’s money-saving calculator can help you determine how long it’ll take to save for goals. What’s more, you can help build up your nest egg through a money-saving app or any savings features available in your own bank’s app.

— Bankrate’s René Bennett and Brandon Renfro, CFP, contributed to previous versions of this story.

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22 tips for 2022

Life Kit's here to help you start — and continue — this year feeling refreshed, motivated and well cared-for.

22 tips for 2022: Money problems don't just disappear. Here's how to face them

Andee Tagle

Andee Tagle

Illustration of a person in miniature hiding underneath a tented wallet on a desk, peering out to a tablescape of bills, finance apps, a laptop, receipts and a few drinks, symbolizing hiding from money problems.

Whether you're worried about keeping the lights on or you're feeling the pressure of student debt, financial woes are a heavy mental burden, and it's only natural to try to turn away from them. But avoiding money issues is often at the expense of our longer-term financial — and mental — wellbeing.

To upend problematic money behavior, try doing an audit of your last few money interactions.

Ask yourself questions like, "What felt good or bad? When did you feel like running away? Did avoiding the money problem lead you to a solution?"

"It can be as simple as noticing, you know, "Oh, when I think about money... I go and clean my kitchen," explains Dr. Judson Brewer , psychiatrist and neuroscientist. "And then what's the result of that? Well, I'm not actually getting at whatever the issue is where I need to pay my bills."

Practicing some simple mindfulness by mapping out our money-avoidance patterns can help dispel that anxious energy and help you reset for the future.

Here's more on how to address issues with money.

22 tips for 2022 is edited and curated by Dalia Mortada, Arielle Retting, Janet W. Lee, Beck Harlan, Beth Donovan and Meghan Keane. This tip comes from an episode of Life Kit hosted by Andee Tagle and produced by Sylvie Douglis.

  • Life Kit: Money
  • personal finance

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How to overcome 8 sources of financial problems & difficulties.

How to overcome financial difficulties and problems in Canada.

Financial problems and challenges happen to everyone at some point, and the stress and worry can get to you. However, realizing that there is almost always a way out can help you not feel so depressed. You may be able to find the way out yourself, or you may need someone else's perspective to help you find a solution. Below we’ll show you  how to overcome financial problems and difficulties  and ease your stress. But, one size does not fit all. If your situation is beyond the general help provided here, we’ll also let you know who you can go to for more in-depth help.

1. Identify the Underlying Problem That's Causing the Difficulties

The first step to overcoming financial problems is to identify the underlying issue that’s causing the financial difficulties. Financial problems are usually a symptom of a bigger issue. To come up with solutions that work in the long run, take the time to identify the real source of your financial troubles. Here are some common things to think about: 

Your problem may not be listed above or it may be more complex. However, the concept of identifying a specific problem is important because it is more likely to result in a lasting solution. Just like with a leaky faucet; placing a bucket below is temporary. Fix the tap and the leak will stop. Focus on solving the problem that’s causing your money troubles, rather than dwelling on your stress.

2. Create a Budget - Spend Money in a Way That Helps Solve the Problem 

One of the best weapons for combating financial problems is a budget. A budget is a monthly spending plan for your money. Creating a budget is like turning the lights on to find your way around a dark room. You no longer need to wander in the dark; banging your shins, tripping over the furniture, and stepping on the dog. Instead, with the lights on, you can see what’s going on and prevent problems before they happen. A budget works much the same way; it guides your spending decisions so that you're spending money on what's really important to you. In this case, you'll  spend your money in a way that helps solve your financial problem .

Click here to learn more about creating a budget , or try out our  budget calculator that guides you through the budgeting process , points out common problems, and offers suggestions to improve your budget.

Track Your Expenses to Build a Budget That Works

As you create your budget, it’s important that your expenses aren’t just guesses – they need to reflect reality. You may want to ​ track your expenses  for at least a couple of weeks (a month is best) to objectively see where you are spending your money and how much you’re spending. Although you may think you know where your money is going, when most people tally up all their purchases for a month, they are usually quite surprised to notice that their spending doesn’t always match up with what they thought their priorities were.

3. Determine Financial Priorities to Guide Your Spending Choices

Steps to overcoming financial problems and difficulties.

4. Identify Small Steps You Can Take to Address the Problem & Achieve Your Goals

Look here to get ideas of where find some extra money each month , get the card paid off, and then permanently have $50 extra to use in your budget every month. However, if by the time you reach this goal you’ve learned to get by without this $50, then use it to accelerate the payment of another debt each month, and get all of your debts paid off more quickly. 

Look for Things You Can Do, Even Temporarily, to Improve Your Situation

Here are more ideas or steps you can consider taking to improve your financial situation and alleviate difficulties:

  • As you look through your budget, ask yourself: Do I want this or do I need it? Will spending this money get me closer to my financial goals or further away? Can I live without it?  Learn more about separating needs from wants .
  • Do you use credit cards for impulse purchases? This can contribute to a cycle of ongoing financial difficulty and  add as much as 50% to everything you purchase .  Learn how to reduce or change impulsive spending habits .
  • Ask yourself if you can downsize anything in your budget or switch to a less expensive option. If vehicle costs are straining your budget, can you downsize your vehicle, get rid of one vehicle (the average person spends over $9,000 per year to own and operate a vehicle), take transit (80% cheaper than owning a vehicle), or car pool? If your rent, mortgage, or home upkeep is bleeding you dry, can you downsize to something more affordable, rent out your basement, rent a room in your house, rent out the storage space in your garage, or can you take in a student for some extra income?
  • If debt is causing you financial problems, here are a lot of ways to reduce your debt or here are a dozen of the most effective ways to get out of debt .

Tools, ideas, and steps to help solve financial difficulties.

  • Can you take on a side job or create another source of income with something you know how to do well?
  • Look outside the box, ask yourself tough questions, invite a trusted friend to have a look at your budget and make suggestions, or  sit down with a Credit Counsellor and get their suggestions .
  • Research viable options that will move you towards your goals. A  consolidation loan ,  speaking with a Credit Counsellor , a  Debt Management Program , or some other option may be a possibility.

While doing any of these can be an unappealing thought, don’t just dismiss them because they’ll move you out of your comfort zone. Keep thinking about them and give them some consideration. Come back to these ideas from time to time to see if you can come up with a new angle on decreasing your expenses or increasing your income that might just work for you. Remember, you’re trying to get through a tough a time; you don’t need to do this forever, just to get back on track. If you’re really struggling, an  experienced Credit Counsellor can be a great, free source of suggestions .

5. Develop Your Plan to Overcome Financial Problems for Good

Once you’ve come up with some ideas for how to begin tackling your financial problems and difficulties, you can  put together a realistic plan to accomplish your goals . Some goals will have a timeline of a few months; others will need a longer timeline, like 24 - 36 months. Write your goals down, but also write down where you’re at now in relation to each goal. For example, if one of your goals is to pay off a $4,000 debt, make sure to write down the current debt balance and your future goal of paying this down to $0. You’ll want to include in your plan the amount of money you’re going to pay on this debt every month so that you can pay it off within your desired time frame. For more  help on setting goals, have a look at this . Here are also some  tips on setting financial goals with your spouse .

If you’re really feeling overwhelmed and stressed by your situation, you can also  reach out to a non-profit credit counselling agency for help . They have professionally trained Credit & Debt Counsellors who can review your situation with you, help you put together a realistic budget, and help you come up with a plan to solve your current challenges and get your finances back on track. Their help is usually free and is always confidential.

6. Review How Things are Going

The last step takes place once you are a few months into working on your plan. Every once-in-a-while, take a few minutes to review how things are going. Is your plan working? Are you making progress toward your goals? If not, you’ll need to take a closer look to figure out why not and adjust your plan. Your plan needs to be realistic, or it’s not going to work. It should also contain some things you weren’t doing before you put the plan in place.

If you keep doing what you were doing before, then you’ll continue to get the same result  as before – problems.  You’ve got to do something different to get a different outcome.

As you follow your plan and see improvements in your situation, be open to the possibility of fine-tuning the plan. Once you start making some progress, you may find you’re doing better than you thought, or you may come up with some new insights. Improving your plan so that you accomplish your goals more quickly is good as long as your budget can afford the changes and everyone who relies on your budget is okay with the more aggressive approach.

Preventing Future Financial Challenges

Unexpected financial challenges are bound to arise in the future - in fact, research shows that  6 in 10 Canadians will experience major life events that will challenge their prior financial plans . The key to tackling these challenges is to be flexible. Review your budget occasionally and make necessary changes.  Build up savings so that you can handle unanticipated expenses  without going into debt and putting yourself in a difficult situation.

Overcoming financial problems and difficulties isn’t easy, but by setting some clear priorities for yourself, identifying ways to achieve these goals, and persevering with your plan, you can overcome the challenges and at the same time, put an end to the financial stress.

  • Online Workshop:  How to Resolve Relationship & Marriage Money Problems & Issues
  • How to Protect Yourself from a Financial Emergency
  • Does Being Organized with Your Money Really Matter?

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  • Add new comment

vivienne replied on Mon, 12/10/2018 - 4:59pm Permalink

how to overcome 8 types of financial problems

sagar pal replied on Tue, 05/28/2019 - 11:43pm Permalink

MyMoneyCoach Team replied on Wed, 05/29/2019 - 8:51am Permalink

Where to get help

Bandela Pratap replied on Thu, 03/05/2020 - 7:10am Permalink

Financial problems

MyMoneyCoach Team replied on Thu, 03/05/2020 - 8:40am Permalink

Finding help

Pushkaraj Sawant replied on Fri, 09/04/2020 - 7:21am Permalink

More More Money Problem

MyMoneyCoach Team replied on Fri, 09/25/2020 - 9:40am Permalink

You should speak with a credit counsellor

Diganta Gohain replied on Sat, 09/05/2020 - 8:43am Permalink

Drastic financial problems

MyMoneyCoach Team replied on Fri, 09/25/2020 - 9:43am Permalink

Two places to look for help

Lanie Won replied on Wed, 05/04/2022 - 7:35am Permalink

Nina replied on Sat, 07/08/2023 - 10:42am Permalink

68 years old with little money for the golden years

MyMoneyCoach Team replied on Mon, 07/10/2023 - 2:58pm Permalink

You should speak with a financial planner

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10 Tips for Resolving your Financial Problems

Financial problems

No one is immune to financial problems. Poor planning or going through a tough time, such as a divorce, illness or unemployment, can really tip the scales. Need help? Here are 10 tips for resolving your financial problems.

  • Identify the problem
  • Make a budget to help you resolve your financial problems
  • Lower your expenses
  • Pay in cash     
  • Stop taking on debt to avoid aggravating your financial problems
  • Avoid buying new
  • Meet with your advisor to discuss your financial problems
  • Increase your income
  • Be realistic when it comes to resolving your financial problems
  • Improve your credit score and adopt good habits

1. Identify the problem

Being in debt does not necessarily mean that you have financial problems . Very few people would be able to buy a house or a car otherwise. However, certain red flags should be taken seriously.

Do any of the following statements apply to you?

  • You have many credit cards and you sometimes use one to pay off another.
  • You've had to refinance your home to support your lifestyle or pay off debts.
  • You are unable to pay off more than the minimum amount required on your credit cards.
  • You delay or skip certain payments.
  • More than 40% of your gross income goes to paying off debt.
  • Your financial situation is a source of stress.

If so, you'll need to take some steps to correct the situation .

2. Make a budget to help you resolve your financial problems

The first step towards managing your financial problems is making a budget . You can use:

  • Budgeting software
  • An online budgeting tool  
  • A mobile app
  • Or simply a piece of paper, a pencil and a calculator

Write down all your sources of income and all your expenses.

To avoid underestimating your expenses, save all your bills and receipts for a month. 

Also consider occasional expenses like school supplies, gifts, vacations, your driver’s licence, etc. Don't forget to budget for paying off your debts .

Reorganize your debts 

Don't forget to include debt repayment among your expenses. 

Start by identifying your debts and listing their amounts and interest rates. Then pay off the debt with the highest interest rate, or consider debt consolidation . Consolidating your debts into a single loan with a lower interest rate will help you pay them off faster. In this case, make sure the interest savings are used to accelerate debt repayment, or for long-term savings. If these savings end up as expenses, the problem will persist.

→ To find out more, read our article Debt management: How to pay off your debt

Good to know: Many consumer associations offer training on budgeting and debt managment. You should have a look!

3. Lower your expenses

Analyze all of your expenses to see which ones you can reduce or eliminate .

Think about reviewing various packages, such as your telecommunication services. You could save by ensuring all they do is meet your needs—nothing more and nothing less. You could also start looking for deals, make a food budget and limit the cost of eating out by packing your own lunch.

4. Pay in cash

Paying in cash can help you stick to your budget . Debit and credit cards are convenient, but they can make it harder to track your expenses.

Magic wand tip icon

Budget tip: Put your cash in separate envelopes for groceries, entertainment and clothing.

→ Looking for new tips to help you save? Read our article: 35 tips to help you save money and optimize your budget .

5. Stop taking on debt to avoid aggravating your financial problems

If you tend to make impulse purchases and regret them later, you may want to start leaving your credit card at home .

Avoid taking on additional debt by living within your means. Make sure you have enough to repay your credit card balance and other debts.

6. Avoid buying new

There are many alternatives to buying new .

  • Buy used or exchange goods . Check out thrift stores, online classifieds ads and Facebook pages for neighbourhood sales. There are many bargains and opportunities for trades.
  • Borrow or rent . This is a good option for items you will rarely use. For example, sign up for a library card to check out books and magazines.
  • Do it yourself . Over the long term, using a coffeemaker is much cheaper than buying coffee every day.
  • Take advantage of freebies . For example, there are many free shows and activities at festivals.

7. Meet with your advisor to discuss your financial problems

Your advisor can help with your financial problems . They will help you review:

  • Your banking package  
  • Your banking fees 
  • Your insurance coverage
  • Whether you should apply for a reduced interest rate credit card (with an annual fee)

→ For tips on optimizing your credit card use, read our article : 6 smart ways to use your credit card .

8. Increase your income

Think about ways to increase your income to deal with your financial problems. Here are some options :

  • Ask your employer if you can work overtime.
  • Offer products and services for extra income.
  • Sell items that you no longer use.
  • Find a roommate.
  • Get a second job.

Be wary of ads that claim you can earn money easily. These are often scams.

Use your emergency fund

In the event of a problem, you can dip into your emergency fund instead of putting yourself into debt . However, make sure you don't make a habit of it. As the name implies, it should only be used in exceptional circumstances. 

Your emergency fund is a cushion to help you deal with the unexpected, such as losing your job or a broken electrical appliance. Ideally, it should cover between 3 to 6 months of expenses , so be sure to use it wisely!

Icon of a lighted bulb with a dollar sign

Pro tip: avoid dipping into your retirement savings, especially your RRSPs. Your withdrawals will be taxable, and you'll also lose contribution room that could be useful in the long term. 

→ Read our article on withdrawing funds from an RRSP in the event of debt to further understand the potential implications .

9. Be realistic when it comes to resolving your financial problems

Realistic goals will help you stay motivated and reduce your financial stress .  If you've overspent for many years, you can't expect to pay off your debts in just a few weeks. 

Just like a diet, significantly restricting your expenses will only increase your appetite to spend. Plan a little wiggle room in your budget to treat yourself .

10. Improve your credit score and adopt good habits

Do you have bad credit? That means you'll be offered higher rates on financing. Why? Because you present a greater risk for the financial institution. Here are a few tips to improve your credit score :

  • Pay your bills on time.
  • Try to keep your credit card balance well below your limit.
  • Don't submit too many credit applications.

Once you have managed your financial problems, continue taking care of your personal finances . The money you save will allow you to create an emergency fund. Ideally, this fund should equal three to six months of expenses . If you run into issues, you'll be able to withdraw money from the fund instead of going into debt.

Next, you can start saving to finance other goals, like retirement, travel or your children's education.

Nobody is immune to financial problems. A stroke of bad luck or a poorly controlled budget could happen to anyone. The important thing is to take action and get help from our team of specialists when necessary. With the right support, you'll be able to manage your financial problems.

Video transcript

- You asked: “How do I make a personal budget?”

I’ll explain faster than I can do 20 push-ups.

A budget can help anyone understand their spending habits, avoid debt, prepare for emergencies and reach their financial goals.

- Finding a tool that helps you organize your budget can be a big help.

It can be anything from an Excel spreadsheet to an app that you download on your phone.

- Identify all your sources of income.

Use your bank statement to identify precisely how much money you make.

You could add up all your deposits, and that’ll tell you how much you have coming in every month.

Don’t be lazy!

Sorry, I’m talking to myself.

- A good personal budget includes three spending categories.

Fixed expenses, that’s like your rent or your phone bill.

Variable expenses.

That’s groceries, or restaurants or shopping.

And infrequent or annual expenses like insurance, or your driver’s licence renewal and your annual ski pass.

- Experts typically recommend putting 10% to 20% of your gross income towards savings.

Now I know, I know. 

That might be painful at first, but no pain no gain!

- Easy for you to say.

- When you deduct expenses from income, you’ll find out if you’re at a deficit or not.

If you are, you might need to make a few cuts to your budget.

Maybe you’re like me and you spend way too much on stylish activewear.

If you have a deficit, it’s easier to cut down on variable expenses like restaurants or shopping.

But if you have any money left over – you can pay off some debt or put some into savings in case an emergency comes up.

Now that you know how to do it, stay on top by keeping track of your budget month to month.

It’s all part of getting into great shape... financially. 

I think I’m done.

How about you?

- Only one left!

- You wish.

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1. Give a Cash Gift

2. make a personal loan, 3. co-sign a loan, 4. create a bill-paying plan, 5. provide employment, 6. give non-cash assistance, 7. prepay bills, 8. help find local resources, the bottom line.

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8 Ways to Help Family Members in Financial Trouble

how to solve a financial problem

During times of hardship, one of the first places many people turn for help is to their loved one and family members. Often people fall into financial difficulties if they experience the sudden loss of a job or are impacted by expensive medical bills. Many well-meaning family members have found themselves sucked into the financial abyss by the problems of a loved one.

Let's take a look at a few options you can consider to help your family members in financial trouble without hurting yourself in the process.

Key Takeaways

  • When a loved one is struggling financially, take a pause before deciding to help and consider whether the problem is temporary or pervasive, and whether they have a plan for avoiding the same pitfalls in the future.
  • If you do decide to help, make sure you have a clear agreement between you and the person about the form of help, such as loan or gift, and any terms for repayment.
  • If you want to give the person something outright, consider giving them cash, paying one of their bills directly, or providing them with non-cash assistance, like gift cards, or certain resources they need.
  • Consider providing them with a job, if you're able to, or help them to create a bill-paying plan or to access local resources like career counseling or training programs.
  • If you want to help them with a loan, consider whether you want to make a personal loan or to co-sign a loan they are seeking from a bank or other financial institution.

If your loved one is having a short-term cash flow problem, you may want to give an outright financial gift. Decide how much you can afford to give, without putting yourself in financial jeopardy, and then either give the maximum amount you can afford all at once (and let your loved one know that's the case) or perhaps give smaller gifts on a periodic or regular basis until the situation is resolved. Make sure it's clearly understood that the money is a gift, not a loan to be repaid, so you don't create an awkward situation for the gift recipient.

If you're considering giving them a substantial sum of money, you'll need to keep an eye on the annual  gift tax  exclusion set each year by the Internal Revenue Service (IRS).

Your family member may approach you and ask for a short-term loan . Talk frankly, clearly write out the terms of the loan on paper, and have both parties sign it. This will help ensure each party is clear on the financial arrangement they're entering into. Some loan details you'll want to include are:

  • The amount of the loan
  • Whether the loan will be a lump-sum payment , or if it will be divided and paid out in installments upon meeting certain conditions (e.g., securing another job or paying down existing debt)
  • The interest rate you will charge for making the loan and how it will be calculated ( compound or simple interest )
  • Payment due dates (including the date of full repayment or final installment due)
  • A recourse if the borrower doesn't make loan payments on time or in full (e.g., increasing interest charges, ceasing any further loan payments, or taking legal action)

If you are going to lend more than $10,000 and/or you're going to charge an interest rate that is substantially different than the going rate for most borrowers, you may want to talk to a tax professional. There can be unique tax implications for low-interest loans among family members.

Your loved one may be interested in obtaining a loan or line of credit (LOC) to help with short-term financial needs, but what if their credit requires getting a co-signer? Would you be willing to co-sign on a loan or LOC from a bank, credit union, or online lender?

Before simply saying "yes" and essentially lending a family member your good credit , it's important to realize there are legal and financial implications to co-signing on a loan. The most critical thing to understand is that you are legally binding yourself to repay the loan if the other borrower fails to do so. The lender can take legal action against you and require that you pay the full amount, even if you had an agreement between you and your family member that you would not have to make payments.

This delinquent loan will also now affect your personal credit. So if your sister/brother/uncle fails to make payments on the loan on time and in full, the lender can report the negative account activity to the credit bureaus to file on your credit report which, in turn, can lower your credit score. 

Co-signing a loan is serious business. The fact that your family member needs a loan co-signer means the lender considers them too great of a risk for the bank to take alone. If the bank isn't sure they'll repay the loan, what guarantees do you have that they will? It may also mean that you could have more difficulty getting a loan for yourself down the road since you are technically taking on this loan and its payment as well.

Before co-signing for a loan, make sure you:

  • Ask for a copy of your family member's credit report, credit score, and monthly budget so you'll have an accurate picture of their finances and ability to repay the loan.
  • Meet with the lender in person (if possible) and be sure you understand all the terms of the loan.
  • Get copies of all documents related to the loan, including the repayment schedule.
  • Ask the lender to notify you in writing if your family member misses a payment or makes a late payment. Finding out about potential repayment problems sooner rather than later can help you take quick action and protect your own credit score.

When helping out a loved one in financial distress, there is a risk of getting sucked into a loop of loans and payments; to avoid this, make sure the terms and structure of the loan or gift are clearly defined in advance.

Often, people in a financial crisis simply aren't aware where their money is going. If you have experience using a budget to manage your own money, you may be able to help your family in creating and using a budget as well. To break the ice, you may want to offer to show them your budget and your bill-paying system and explain how it helps you make financial decisions.

As you work together to help them get a handle on their financial situation, the process will point out places where they can cut back on expenses or try to increase their income to better meet their financial obligations.

If you're not comfortable making a loan or giving a cash gift, consider hiring your family member to assist with needed tasks at an agreed-upon rate. This side job may go a long way toward helping them earn the money they need to pay their bills and help you finish up any jobs that you've been putting off. Treat the arrangement like you would any other employee – spell out clearly the work that needs to be done, the deadlines and the rate of pay. Be sure to include a provision about how you'll deal with poor or incomplete work.

If you don't have cash you're able to give or loan to your financially-strapped family member, realize that your time, patience and ability to help them brainstorm and problem solve are also valuable assets you can provide.

If you're uncomfortable or unwilling to give your family member cash, consider giving non-cash financial assistance, such as gift cards or gift certificates. You'll have more control over what your money will be used for, and you can easily buy gift cards in varying amounts at most stores.

You may want to consider prepaying one or more regular bills your loved one receives (rent/mortgage, utility bills, or insurance premiums ) to help them during their current financial crunch. Offering to do something, such as making their car payment, may help them avoid a short-term crisis and give them the little extra time they need to work out of their situation.

You simply may not wish or be able to provide your family member with financial assistance or hands-on help. But you can still play a key role by helping them find local professionals that can steer them in the right direction, such as:

  • Career counselor and employment agencies
  • Welfare agencies and similar services
  • Credit and debt counselors
  • Lenders who can provide short-term solutions

The most important step is sitting down with your loved one and asking specifically what help they need to work their way out of their current situation. From there you'll have a better idea of the type of information and assistance they need. For example, if they need to make more money, you could help them look for jobs and update their resume. If they need help repaying credit card debt , you could call local credit counseling agencies to learn what services they offer, how much it costs, and how it could benefit your family member.

Family members and money aren't always a good mix. But, in tough economic times or when faced with unexpected emergencies, your loved ones may truly need your financial assistance. Before you commit to helping, be sure to think through what you can and can't afford to do. Remember, if your own resources are limited, there are meaningful, effective and creative ways to help your family members.

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How to Solve Financial Problems by Changing Your Attitude about Money

  • Whitney Hopler Crosswalk.com Contributing Writer
  • Updated Sep 19, 2019

How to Solve Financial Problems by Changing Your Attitude about Money

Editor's Note: The following is a report on the practical applications of Carrie Rocha's new book, Pocket Your Dollars: 5 Attitude Changes that will Help You Pay Down Debt, Avoid Financial Stress, and Keep More of What You Make (Bethany House, 2013).

If you’re struggling to manage your money well but can’t seem to change unhealthy behaviors such as spending too much and saving too little, there’s hope. You can solve your financial problems in 11 steps by looking beyond your behaviors to the attitudes behind them – and then relying on God’s help to change those attitudes to ones that reflect His wisdom.

Here are 11 steps for how you can solve your financial problems by changing your attitudes about money:

2: Overcome the “I deserve a treat” attitude. This attitude drives you to make impulsive purchases to reward yourself for hard work or give yourself some other emotional gratification, such as comfort or stress relief. Realize, though, that habitually buying things on impulse wastes lots of money as your small expenditures add up to large amounts. The money that you currently spend impulsively to splurge on little treats (from candy bars or cups of coffee to new outfits or gadgets) can help you save up toward more meaningful purchases that would add much more value to your life. Spend some time reflecting on what you’d most like to spend your money on, and why. Clarify the dreams and goals you’d like to pursue once you’ve saved enough money for them – and then remind yourself of those dreams and goals, to motivate yourself to refrain from impulsive spending and allocate the money you would have previously spent frivolously to savings instead.

5: Overcome the “I can’t afford it” attitude . If you feel guilt or shame when spending money, despite the fact that you actually can afford what you’re purchasing, you may be suffering from this attitude of excessive deprivation. Recognize that it’s okay to indulge in purchasing expensive items and experiences that are meaningful to you and won’t put you in debt. If your frugality is negatively impacting your life or your relationships with other people, ask God to help you become more generous. Then start a habit of giving more to others through your church and charities, and buying some things you’d especially enjoy for yourself.

6: Change the self-talk in your mind . Honestly examine the thoughts that run through your mind about money and challenge them regularly to discern whether or not they reflect biblical truth. If not, intentionally replace inaccurate, unhelpful thoughts about money with true and healthy thoughts.

7: Stand up to pressure to make unhealthy financial choices. Pray for the willpower you need to resist spending money irresponsibly again, and whenever you’re tempted, ask God to help you in that moment. Develop strategies to help you successfully manage your money well, such as closing every credit card except for one and paying mostly cash for your purchases. Remain committed to lasting change.

8: Create a spending plan. Plan how you intend to spend, give, and invest the money you have. This is similar to a budget, but rather than focusing on your financial constraints, a spending plan focuses on your financial goals. Include your predictable monthly expenses (such as groceries and utility bills), your predictable non-routine expenses (such as vacations and new clothes), and your unpredictable expenses (emergencies).

9: Pay off debt . Work diligently to pay off all of your debts by focusing on one debt at a time. List your debts in order of balances owed (regardless of interest rates), and then work your way through the list, paying off the lowest balance loans first and moving on – one by one – to the highest balance debts until they’re all paid in full.

10: Reduce your expenses going forward . Be creative about reducing your expenses as much as possible, from using coupons to buying different items during the seasons they’re on sale.

Start a financial journal today for how you will begin taking these steps and keep a log of how you do! Don't beat yourself up when you fail, get up and try again. Financial wisdom takes time to practice and learn.

Adapted from Pocket Your Dollars: 5 Attitude Changes that will Help You Pay Down Debt, Avoid Financial Stress, and Keep More of What You Make , by Carrie Rocha, copyright 2013 by Pocket Your Dollars. Published by Bethany House Publishers, a division of Baker Publishing Group, Minneapolis, Mn., www.bethanyhouse.com .  

Carrie Rocha owns and operates PocketYourDollars.com , one of the most popular couponing and personal finance sites on the web. She shares money-saving ideas she learned as her family eliminated $50,000 in debt in two-and-a-half years. A sought-after media personality, Carrie has been featured on Wall Street Journal Radio, Glamour, Yahoo! Finance, CNNMoney.com, FoxBusiness.com, and many other magazines and websites. Carrie lives with her husband and two daughters in Maple Grove, Minnesota. Learn more at www.pocketyourdollars.com .

Whitney Hopler is a freelance writer and editor who serves as both a Crosswalk.com contributing writer and the editor of About.com’s site on angels and miracles . Contact Whitney at: [email protected] to send in a true story of an angelic encounter or a miraculous experience like an answered prayer .

Photo Credit: ©GettyImages/primipil 

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The problem with financial literacy—and a proposed solution.

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The problem with financial literacy is that it gets off on the wrong foot. The very moniker is condescending, implying that those it serves are financially illiterate, that they have no idea whatsoever how to use money.

Thus, in addition to condescension, we must add inaccuracy to the list of financial literacy’s foibles, because having a lot of money certainly is no prerequisite – or guarantee, as it so happens – for understanding how it works. Even the poorest of the poor are embracing entrepreneurship through  the advent of micro-finance  to raise their standard of living from critical to stable. Even the 10-year-old kid buying a candy bar at the corner store is successfully completing a transaction. And even the 50-something who spends 110% of his annual income with the aid of a home equity line of credit may be demonstrating a more dangerous lack of money mastery than those generally labeled financially illiterate.

And besides, who among us is quick to embrace a solution that requires the admission of complete ignorance?

Financial Illiteracy

We shouldn’t be surprised, because there is a long and storied history of paternalism exhibited by those who’ve reached self-proclaimed mastery across the span of personal finance instruction. Stock brokerages horded information and sold it for a premium prior to the introduction of low-cost brokerage firms and mutual funds, and the remnants of that still exist today, as many still purposefully use industry jargon and proprietary language to lead investors to the conclusion, “Well, I guess I’d better work with you, because I have no idea what you’re talking about.”

At the other end of the spectrum, the personal finance “gurus” who claim to serve the 99% are just as culpable. They use name-calling and intimidation to motivate their followers, thereby only attracting those who are truly at the end of their financial ropes. More schtick than substance, their “advice” is riddled with conflicts of interest and too often objectively misguided.

Unlike these household names, the financial literacy movement, I’m convinced, is well-intentioned. But regardless, it’s been deemed “ an epic fail in America .” So what’s a proposed solution? This is just a start:

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How to Conduct a Problem-Solving Session with Finance?

How to Conduct a Feedback Session with Operations

In the fast-paced and dynamic world of finance, problem-solving skills are invaluable. Whether you are a financial manager, a business owner, or an aspiring finance professional, being able to effectively address and solve financial issues is crucial for success. In this article, we will explore the importance of problem-solving in finance and provide a step-by-step guide on how to conduct a problem-solving session with finance.

Understanding the Importance of Problem-Solving in Finance

Problem-solving is a fundamental skill in financial management. It involves identifying, analyzing, and resolving financial issues that may arise in a business or organizational setting. Successful problem-solving not only helps in mitigating risks but also contributes to the overall growth and profitability of a company.

When it comes to financial management, problem-solving plays a pivotal role in ensuring the smooth operation and sustainability of a business. Financial managers are responsible for making strategic decisions that can impact the organization’s financial performance. By effectively addressing problems and finding innovative solutions, financial managers can enhance financial stability, optimize resource allocation, and foster growth.

Effective problem-solving in finance offers numerous benefits. Firstly, it helps in identifying and rectifying financial inefficiencies, thus improving cost-effectiveness. For example, if a company is experiencing cash flow issues, a financial manager can analyze the problem and implement strategies to improve cash flow, such as negotiating better payment terms with suppliers or implementing more efficient billing processes.

Secondly, effective problem-solving in finance aids in identifying potential opportunities and enhancing revenue generation. Financial managers who are skilled problem solvers can identify market trends, analyze customer needs, and develop innovative financial strategies to capitalize on emerging opportunities. This could involve launching new products or services, entering new markets, or implementing cost-saving measures.

Moreover, successful problem-solving fosters teamwork, promotes critical thinking, and strengthens decision-making abilities within the finance department. When financial managers and their teams work together to solve complex financial problems, it encourages collaboration and knowledge sharing. This not only leads to better problem-solving outcomes but also cultivates a culture of continuous improvement and learning within the organization.

Preparing for a Problem-Solving Session

Before conducting a problem-solving session, thorough preparation is essential to ensure its effectiveness. Here are the key steps involved:

Identifying the Financial Issues at Hand

The first step is to clearly identify the financial issues that need to be addressed. This could include problems with cash flow, budgeting, financial reporting, investment decisions, or any other challenge affecting the financial performance of the organization.

For example, if the organization is experiencing cash flow problems, it is important to determine the root cause of the issue. Is it due to slow-paying customers, high expenses, or ineffective collection procedures? By identifying the specific financial issues, the problem-solving session can be focused and targeted.

Gathering Relevant Financial Data

Once the issues have been identified, gather all the relevant financial data that is necessary for analysis and decision-making. This may include financial statements, sales reports, budget details, and any other financial information related to the problem at hand.

For instance, if the problem is related to budgeting, it is crucial to gather information on the organization’s current budget, actual expenses, and projected revenue. This data will provide a comprehensive understanding of the financial situation and enable the team to make informed decisions during the problem-solving session.

Assembling the Right Team for the Session

Next, assemble a team of individuals who possess the required expertise and knowledge to contribute to problem-solving. This could include financial analysts, accountants, business strategists, and other relevant stakeholders. Ensure that the team members have diverse perspectives and can bring fresh insights to the table.

For example, having a financial analyst on the team can provide valuable insights into financial data analysis and forecasting. An accountant can offer expertise in identifying financial discrepancies and suggesting corrective measures. By assembling a diverse team, the problem-solving session can benefit from a wide range of perspectives and expertise.

Additionally, it is important to consider the dynamics of the team. Are the members able to collaborate effectively? Do they have good communication skills? These factors can significantly impact the success of the problem-solving session.

Conducting the Problem-Solving Session

Once the preparation phase is complete, it’s time to conduct the problem-solving session. Follow these steps to ensure a productive and efficient session:

Before diving into the problem-solving session, it is important to understand the significance of this phase. This is where the real work happens, where ideas are shared, and solutions are generated. It is a collaborative effort that requires effective communication and critical thinking.

Setting the Agenda for the Meeting

Start by setting a clear agenda for the problem-solving session. Outline the goals, objectives, and topics that need to be discussed during the meeting. This ensures that everyone is aware of the purpose of the session and can come prepared with relevant information and ideas.

When setting the agenda, consider the time constraints and prioritize the most pressing issues. This will help keep the session focused and ensure that valuable time is not wasted on less important matters.

Facilitating Open and Constructive Dialogue

During the session, encourage open and constructive dialogue among the team members. Create a safe and non-judgmental environment where everyone feels comfortable expressing their opinions and challenging existing beliefs. This fosters creativity and innovation, leading to better problem-solving outcomes.

As the facilitator, it is important to actively listen to each team member and ensure that their voices are heard. Encourage active participation and discourage any form of dominance or bias. This will help create a collaborative atmosphere where diverse perspectives can be explored.

Utilizing Problem-Solving Techniques in Finance

There are several problem-solving techniques that can be applied in a finance context. These include brainstorming, SWOT analysis, financial modeling, cost-benefit analysis, and root cause analysis, among others. Apply the appropriate techniques to systematically analyze the financial issues and generate potential solutions.

Brainstorming is a valuable technique that allows team members to freely share their ideas and thoughts without any judgment. This can lead to innovative solutions that may not have been considered otherwise. SWOT analysis helps identify the strengths, weaknesses, opportunities, and threats associated with the problem at hand. Financial modeling allows for a quantitative analysis of different scenarios, helping to evaluate the potential outcomes of each solution.

Cost-benefit analysis helps weigh the financial costs and benefits of each solution, enabling decision-makers to make informed choices. Root cause analysis helps identify the underlying causes of the problem, allowing for targeted solutions that address the core issues.

By utilizing these problem-solving techniques, the team can approach the financial issues from different angles, ensuring a comprehensive analysis and a wider range of potential solutions.

Remember, the problem-solving session is not just about finding a quick fix. It is about understanding the problem, exploring various options, and making informed decisions that will have a positive impact on the financial health of the organization.

Post-Session Actions and Follow-ups

Once the problem-solving session is over, there are critical steps to take to ensure the proposed solutions are implemented effectively:

Analyzing the Results of the Session

Review and analyze the outcomes of the problem-solving session. This step is crucial as it allows for a comprehensive understanding of the proposed solutions and their potential impact on the organization. By carefully evaluating the feasibility, potential impact, and alignment with the organization’s goals, finance professionals can make informed decisions on which solutions to prioritize.

During the analysis, it is essential to consider various factors, such as the resources required for implementation, the potential risks involved, and the expected timeline for achieving the desired outcomes. By conducting a thorough evaluation, finance professionals can identify the most viable options and prioritize them based on their urgency and significance.

Implementing the Proposed Solutions

Once the proposed solutions have been analyzed and prioritized, the next step is to develop an actionable plan for their implementation. This plan should outline the specific steps required to execute each solution effectively.

Assigning responsibilities is a critical aspect of the implementation process. By clearly defining who is accountable for each task, finance professionals can ensure that everyone involved understands their role and can contribute to the successful execution of the solutions. Additionally, setting deadlines is crucial to keep the implementation process on track and avoid unnecessary delays.

Furthermore, allocating the necessary resources is essential for the successful implementation of the proposed solutions. This includes financial resources, human resources, and any other required assets. By ensuring that the necessary resources are available, finance professionals can increase the likelihood of achieving the desired outcomes.

Effective implementation also requires clear communication and coordination among all stakeholders. Regular updates and progress reports should be shared to keep everyone informed and aligned. Additionally, monitoring the progress of the implementation is vital to identify any potential issues or roadblocks early on and take corrective actions as needed.

Monitoring the Impact of Implemented Solutions

Implementing the proposed solutions is not the end of the problem-solving process. It is crucial to regularly monitor the impact of the implemented solutions on the financial performance of the organization. This step allows finance professionals to assess the effectiveness of the solutions and make any necessary adjustments to optimize the outcomes.

Tracking relevant key performance indicators (KPIs) is an effective way to measure the impact of the implemented solutions. These KPIs can include financial metrics, such as revenue growth, cost savings, and profitability, as well as non-financial metrics, such as customer satisfaction and employee productivity. By monitoring these indicators, finance professionals can gain valuable insights into the success of the implemented solutions and identify areas for improvement.

Continuous feedback gathering is also essential in monitoring the impact of the implemented solutions. By seeking input from various stakeholders, including employees, customers, and partners, finance professionals can gain a holistic understanding of the outcomes and identify any potential issues or areas of improvement.

Based on the feedback and performance data gathered, finance professionals can make necessary adjustments to optimize the outcomes of the implemented solutions. This iterative approach ensures that the organization remains agile and responsive to changing circumstances.

In conclusion, conducting a problem-solving session with finance is an essential process for mitigating financial risks and driving organizational growth. By understanding the importance of problem-solving in finance, adequately preparing for the session, conducting it effectively, and taking post-session actions and follow-ups, finance professionals can effectively address financial challenges and steer their organizations toward success.

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Ed Bastian on the importance of financial well-being

Headshot of Delta CEO Ed Bastian

As CEO of Delta Air Lines, Ed Bastian leads 100,000 global professionals who are building the world’s premier international airline, powered by a people-driven, customer-focused culture and spirit of innovation.

Follow Ed on LinkedIn

how to solve a financial problem

This week, Delta Air Lines is doing something extraordinary – paying $1.4 billion in profits directly to our employees, a profit-sharing arrangement for frontline workers unmatched in its scope and impact. Every eligible Delta employee will receive a check that, this year, totals more than 10% of their annual salary. It’s something we do every year on Valentine’s Day to demonstrate our gratitude and love for our people, who serve our customers and ensure their safety and comfort every day.

This year’s payment is no anomaly. Over the past 10 years, Delta has shared more than $1 billion in annual profits with our employees seven times. All told, since we began our profit-sharing program in 2007, the company has paid our employees $11 billion. We are unaware of any major company in our country with a comparable level of success sharing.

Rewarding our people is fundamental to Delta’s values-centered business model. But writing well-earned checks isn’t always enough. Recent data indicates more than 50% of Americans don’t have access to $1,000 in savings in case of a financial emergency. That creates an enormous amount of stress and uncertainty for families across our nation. While we can’t solve the problem for everyone, we wanted to help Delta employees achieve a level of financial security by boosting their savings and financial wellness.

That’s why last year, we launched the Emergency Savings Program, in partnership with Operation HOPE and Fidelity Investments. Participating employees can earn $1,000 from Delta to fund a rainy day account, along with individualized coaching and a host of tools from Operation HOPE and Fidelity to enhance their financial literacy and well-being.

how to solve a financial problem

The results have been remarkable. Since the start of the program, more than 35,000 Delta employees have begun contributing towards an emergency savings account. Over 21,000 have completed the program, earning a $1,000 safety net contribution from Delta – and 94% of that group have kept money in their accounts, allowing it to accumulate interest until it’s truly needed for an emergency. Most participating employees are actively growing that safety net with their own earnings, on average saving $74 from every paycheck via payroll deduction.

Establishing an emergency savings account has had a significant impact on the lives of participants. Among employees surveyed, those who reported being able to save for goals other than emergencies more than doubled after completing the program. In addition, surveys taken before and after employees completed the program revealed a:

  • 62% increase in those who felt they have control of their finances.
  • 42% increase in employees who are confident in their ability to cover a $1,000 expense with emergency savings.
  • 33% increase in those who felt able to save for retirement.
  • 41% increase in those who said they can spend less than they earn.

We recently published a white paper with more detail on Delta’s Emergency Savings Program .

At Delta, our No. 1 job is taking care of our people – our success flows from this simple concept. Sharing profits with our people, along with providing tools and education to help manage and grow their wealth, is part of our responsibility as a values-led organization. All of us at Delta, Operation HOPE and Fidelity hope our efforts can serve as a model for other businesses and organizations that are seeking to better serve all of their stakeholders, including their employees, while helping to solve the serious issue of financial insecurity that faces millions of American families.

Ed Bastian CEO, Delta Air Lines

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Not finding what you need?

Everything you need to know about Financial Fair Play in football - and how it works

A deep dive into everything you need to know about the ever-relevant Financial Fair Play in football.

By Ollie Cooper, news reporter

Tuesday 13 February 2024 18:12, UK

Pic: Reuters/Action Images/Andrew Boyers Livepic

Financial Fair Play, or FFP, won't be a new term for anyone who's even marginally interested in football.

It's a set of rules designed to stop football clubs from spending more than they generate.

Many of us know that clubs like Everton have fallen foul, and been punished, and others (like Manchester City and Nottingham Forest) are facing charges. But it can be difficult to cut through the noise and understand what the actual rules and issues are.

Let's get you up to speed on what the current legislation is and means - as well as what changes could be implemented later.

FFP or PSR?

Admittedly, it needs to get a little more confusing before it gets clearer.

Both the Premier League and UEFA (football's European governing body) have stopped using the term FFP.

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The Premier League now goes with the "PSR" moniker instead - which stands for "Profit and Sustainability Rules". UEFA rebrands its regulations as "Financial Sustainability."

The regulations differ but soon should align.

Spending on Tottenham Hotspur&#39;s new stadium was not included in its annual accounts report for PSR. Pic: iStock

What are the Premier League rules?

For now, there are different rules for each country and each league - but we'll give you the Premier League set for ease.

In its simplest possible terms, teams need to make sure they aren't recording a loss greater than £105m across the combined accounts of the previous three seasons.

That's the headline figure to work off, but annoyingly, it's not that simple.

The Ts & Cs

That £105m is caveated by the fact that £90m must be covered by "secure funding" from a club's owners.

Secure funding is a fancy way of saying "buying up more shares", rather than an owner simply lending their club money.

That means a club can only lose £15m of its "own" money every three years.

In other words - any loss above £15m but below £105m has to be guaranteed by club owners. If it isn't, or you go above that £105m limit, you are in breach of the rules.

To add to the confusion, certain costs can be deducted - such as investment in youth development, infrastructure or community projects, among other examples.

The rules are similar as you go down the leagues and tiers of English football, run by the EFL - the figures just get smaller (the Championship's top figure, for example, is £39m).

A quick example

Club X and Club Y each spend £18m over budget across three seasons. That's £3m over the PSR limit.

Club X has secure funding to cover that £3m, but Club Y does not. Club X is therefore in the clear - as the club itself has only recorded a loss of £15m (the owner's shares cover the rest).

Club Y, on the other hand, is in breach of the rules - meaning it must produce a financial plan for the next two seasons and offset the losses with more secure funding (owners buying up more shares).

That doesn't sound so severe, right?

Harsher punishments

It's going over the £105m figure that sees the harsher punishments - with rulebreakers referred to an independent commission, which can dish out heavy fines or, as we've seen this season, points deductions…

Another example:

Club A overspends by £110m across three seasons. The owners' secure funding covers £90m of that - meaning the club itself has lost £20m. That's £5m over the £15m threshold - and the club is now in breach of PSR.

This brings us nicely to Everton.

The blue half of Merseyside has endured a rough few years. That was compounded by a Premier League announcement earlier this season that the Toffees would be slapped with a 10-point deduction - throwing the club into a relegation battle.

Everton fans hold up a sign in protest to Premier League&#39;s FFP ruling. Pic: Reuters/Jason Cairnduff

"Following a five-day hearing last month, the commission determined that Everton FC's PSR calculation for the relevant period resulted in a loss of £124.5m, as contended by the Premier League, which exceeded the threshold of £105m permitted under the PSRs," read a Premier League statement on 17 November last year.

Everton actually recorded losses of £370m during the period it was charged for (2018-2021), but rulemakers allowed all clubs large deductions because of the COVID-19 pandemic, and chunks of that total figure were spent on those allowable expenses we outlined earlier (like on the stadium, infrastructure, women's teams etc).

Even with those deductions and other factors Everton considers mitigating circumstances, it was judged to have spent £19.5m over the allowable threshold.

Read more: Premier League faces fresh legal battle over rule changes Premier League admits VAR delays spoiling fans' enjoyment of football

The club was also found to have misled the league over the source of stadium funding and its intention to raise cash from a player sale.

The club has grounds for an appeal, which is ongoing.

Nottingham Forest and Everton (yes - again)

This calendar year, although still young, has seen the Premier League refer two clubs to the independent commission over breaches.

Everton will once again send its financial whizzes to face the panel after further breaches were identified by the league, while relative Premier League new boys Nottingham Forest have a slightly different set of rules to play by.

Forest's permitted losses are lower than the £105m limit because the club was in a lower division for a year of the accounting period. Secure funding-wise, the club is only allowed £13m each for the 2020-21 and 2021-22 seasons when the team were in the Championship, added to £35m for last season, which they played in the Premier League.

Nottingham Forest goalkeeper Matt Turner, whose club also faces charges. Pic: Reuters / Phil Noble

Both clubs have been referred to that independent commission we mentioned earlier, and we wait to see what any punishment actually looks like.

Closing loopholes

The Premier League moved to ban long-term amortisation recently.

That is the spreading out of the cost of a transfer over the course of multiple seasons.

Case in point: Chelsea.

The Blues, for three successive years (six transfer windows), signed players for huge fees on big contracts to avoid being hit by PSR.

Moises Caicedo joined for a mooted £115m on an eight-year contract worth a reported £150,000 per week. If those figures are correct, that means the deal is worth a total of £177.4m - one so high it would have undoubtedly set alarm bells ringing in the legal and finance departments of the west London club.

The solution? Spreading the cost of that transfer over eight years - breaking it down into the far more PSR-friendly chunks of £22.18m per year.

Chelsea completed similar deals for Enzo Fernandez, Mykhailo Mudryk and Christopher Nkunku, before the loophole was closed.

Clubs have now ruled the maximum number of seasons you can spread the cost of a transfer over is five.

Manchester City

Well done for sticking with it for so long - now we've arrived at the big one.

For this, we've enlisted the help of our sports correspondent Rob Harris ...

Rob Harris

Sports correspondent

The Premier League investigation into Manchester City is its largest and most complex.

This is not just a simple matter of determining whether the club overspent in the pursuit of glory.

The accusations feature deception to circumvent the rules, failing to provide accurate information and lack of cooperation - amounting to 115 charges.

Proving the case could be challenging.

The evidence - claims sponsorship income was inflated and linked to the Abu Dhabi ownership - emerged in documents obtained from within the club through the Football Leaks hacker.

Were it not for the emails and documents from City and the UAE, this case would probably never exist.

There has never been any detailed denial of allegations - only an insistence from City that "irrefutable evidence exists in support of its position".

They did succeed in overturning a UEFA ban when some of the allegations were investigated by European football's governing body with the case in part found to be time-barred.

But City were fined €10m for obstructing the investigation.

Abu Dhabi wealth has transformed City into a force since Sheikh Mansour's takeover in 2008.

Whether the formation of an all-conquering squad was within the rules will determine how all the success is viewed.

And any punishments - which City will strongly contest - could have far-reaching repercussions.

What changes could we see?

Recent reports indicate that sweeping changes could be imminent, with suggestions new rules could be in place by the summer - Premier League clubs last week held a series of discussions, with PSR one of the key points on the agenda.

However, Sky News understands that while changes are expected to take place eventually, it is unlikely they will be in place any time soon.

For changes to the legislation as it stands, clubs would need to agree on new rules and get it past the Premier League itself - which would need to make sure tweaks or additions allowed its members to compete within UEFA and FIFA regulations, while balancing the financial needs of clubs in the lower football leagues.

What are UEFA's plans?

UEFA believes its use of "fair play" was misconstrued - as it didn't necessarily make competitions fairer.

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how to solve a financial problem

Squad cost rules have just been introduced. They mean, by 2025, competing in the likes of the Champions League will require clubs to only spend 70% of revenue on salaries and transfer fees.

Club owners will be allowed to cover losses of €60m across three years or €90m if the clubs are judged to be in good financial health.

Common Problems with the New FAFSA and How to Solve Them

Woman working on her laptop outdoors.

The FAFSA® (Free Application for Federal Student Aid) Simplification Act passed by congress required the US Department of Education to overhaul the FAFSA® form on or before December 31, 2023. This pushed back the 2024-2025 FAFSA® opening date to December 31, 2023. When the new FAFSA® finally “soft launched” on Dec. 31, families reported many issues, glitches, and confusing errors. 

The Office of Federal Student Aid (FSA) has been working diligently to resolve many of these known issues, but in the meantime, we wanted to provide suggestions based on advice from FSA, NCAN (National College Attainment Network), NASFAA (National Association of Student Financial Aid Admissions), and many other financial aid professionals that are supporting students in their FAFSA® filings. 

Best practices for completing the new 2024-25 FAFSA ® form

1. complete the fafsa all at once.

Plan to complete the FAFSA® in one sitting for the best experience. Some of the known issues reported by the Department of Education since the soft launch period are related to students and/or parents stopping part way through their FAFSA®. When they return, many are finding that they have to reanswer questions or are unable to proceed to complete the FAFSA®. 

Tip : Ensure all contributors, all necessary documents, all FSA IDs, etc. are ready before starting the application. 

2. Create your FSA ID in advance

Students and parents should create their FSA ID at least 4 days in advance of attempting to complete the FAFSA®. Not sure who needs to create an FSA ID? Here’s how to find out!  

3. Start the FAFSA before inviting your parent(s)

The FAFSA® is a student application on which their parent(s) will provide financial information. Although either the parent or the student may start the FAFSA®, we recommend the student start the FAFSA® and invite the parent(s) for the best experience. 

Tip : Since the new FAFSA® rollout, families have reported that parents often do not receive the contributor invite email. If this happens to your family, have the parent log in to studenaid.gov using their FSA ID. They may find that they have access to begin their portion of the FAFSA® once they log in.

4. Don’t miss hidden parts of the form

Students are reporting that they are struggling to sign the FAFSA® before sending it to their parents. This is commonly because the student is not actually scrolling to the bottom of the page to see the “Continue” button. To sign the FAFSA®, please ensure you scroll to the bottom, press continue, and electronically sign your FAFSA®. See the screenshots below! 

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Tip : Ensure that the student signs the FAFSA® before the parent contributor(s) begin, sign, or submit their section. We have heard of reports that some students were unable to log back in to sign after their parents.

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5. Make sure you file all your state’s required forms

If you are in the following states, be aware that you will need to file your state aid application separately from the FAFSA®.

  • Mississippi
  • Pennsylvania

In previous years, filing the FAFSA® would make you automatically eligible for state financial aid programs, and it is expected that next year that functionality will return.  Please speak to your counselor or visit your state financial aid website for more information, and be mindful of state or college priority deadlines for financial aid. 

6. Review Dependency Status questions carefully   

Many students have reported making an error on the question regarding Dependency Status. The question first notifies the student that they were determined to be a dependent student based on the questions they had answered. 

They are then asked “Are the student’s parents unwilling to provide their information, but the student doesn’t have an unusual circumstance that prevents them from contacting or obtaining their parents’ information?”

  • Most students need to answer “No” to this question, as their parents will be willing to contribute to their FAFSA®. When a student answers “Yes”, this makes the student eligible only for Direct Unsubsidized Student Loans.
  • Tip: If you are a student and your parents are refusing to be a contributor on your FAFSA®, first reach out to your high school counselor, the financial aid office of the college you would like to attend, or Going Merry for support with explaining the importance of their contribution on the FAFSA®. If a student’s parent(s) fail to contribute to their FAFSA®, the student will only be able to receive Federal Direct Unsubsidized Student Loans

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7. Answer questions about free or reduced lunch accurately

Many parent contributors have reported confusion regarding the question about federal benefits the family has received (screenshot below) when their student receives free or reduced lunch.

  • If a student received free or reduced-price lunch in 2022 or 2023 due to household eligibility, they SHOULD select that they were the recipient of the free or reduced price school lunch program.
  • If the student received free or reduced-price lunch in 2022 or 2023 due to the COVID-19 emergency, the parent should NOT select that they were the recipient of the free or reduced price school lunch program, unless they would have received the benefit based on the Department of Agriculture Eligibility Requirements .
  • If the student received free or reduced-price lunch in 2022 or 2023 due to community eligibility (i.e. all students at the school receive free or reduced price lunch) rather than household eligibility, they should NOT check that they  were the recipient of the free or reduced price school lunch program, unless they would have received the benefit based on the Department of Agriculture Eligibility Requirements .

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8. Connect with your school’s financial aid office 

Colleges will not receive information from FSA until early in February. This could mean students receive their financial aid award letters later than normal, and the process of filing a financial aid appeal may be more compressed. 

Tip : Connect with the Financial Aid Office at the school you are planning to attend to get more information on what they anticipate their timeline for sending out financial aid award letters will be. 

9. Be patient!

Students will need to wait until the first half of March to receive their FAFSA® Submission Summary or their SAI (student aid index) . Be patient and wait for your FAFSA® to process! 

Tip : Some students are receiving estimated SAIs shortly following the submission of their FAFSA®. Because the last official update from FSA indicated that an SAI would not be available until a student’s FAFSA® Submission Summary is available, and that FAFSA® Submission Summary will be provided once the student’s FAFSA® is processed, we would encourage students to check to see if they have received their FAFSA® Submission Summary if they received an estimated SAI. If a student does not see their FAFSA® Submission Summary, we believe that this indicates that their FAFSA® has not been processed and that the estimated SAI may or may not be accurate. Please be patient!  

10. Get help when you need it 

Students and parents who make a mistake or error on the FAFSA® must wait until the FAFSA® is processed to make a correction.

You can receive free help and advice via:

  • The Financial Aid Office of a college or university near you. 
  • The Financial Aid office of the college or university you plan to attend. 
  • The Counselor or College and Career Advisor at your high school.
  • Going Merry via [email protected] and 
  • FSA Information Center via 1-800-4-FED-AID (800-433-3243), live chat, or email. 

Known issues and their workarounds

  • Workaround: Delete current application and start a new one.
  • Workaround: Answer country question again.
  • Workaround: Re-sign the FAFSA.
  • Workaround: Search by federal school code
  • Workaround: Delete mailing address on the Create an Account page or waiting until the SSA Match is complete

Known issues for students or parents that have yet to be resolved

  • Students without SSNs that exit FAFSA form before “State of Legal Residency” question will be unable to continue or start new form.
  • Parent with no SSN is unable to start FAFSA form for student or contribute to an existing form even if the students starts the application.
  • Parent with foreign legal residence is unable to submit FAFSA when they have not filed taxes due to earning no income.
  • FAFSA is unable to be submitted if parent contributor “Income Tax Paid” is greater than “AGI” when completing manual income/tax entry.
  • Married student or parent who does not provide spouse’s info before leaving the FAFSA will not be able to complete and submit after returning to the form.

Frequently asked questions about the new FAFSA ®

Confused about the new FAFSA? You’re not the only one. Here are some commonly asked questions about process. 

1. Which FAFSA® application should I be filling out if I’m a high school senior?

If you are enrolling in college in Fall 2024, you will be filing the FAFSA® for the 2024-2025 award year.

Tip : If you plan to enroll in college during the Summer of 2024, you may also need to complete the FAFSA® for the 2023-2024 award year. Connect with the financial aid office at the college you plan to attend to learn more about their process. 

2. Who is a contributor on the 2024-2025 FAFSA®? 

A FAFSA® contributor is a student, parent(s), or adoptive parent(s). 

Tip : Students who are a ward of the state, orphan, in foster care, and/or have a legal guardian are considered independent for the purpose of the FAFSA®. Independent students will be the only contributor on their FAFSA®.

3. Which parent should be a contributor on the FAFSA® if student parents are divorced? 

Students with divorced or separated parents should ask these questions to determine which of their parents should be a contributor on the FAFSA®:

1. Do your biological or adoptive parents live together? If yes, both parents will need to be a contributor on your FAFSA®. If not, proceed to question 2.

2. Did one parent provide more financial support than the other over the last 12 months?

  • If yes, the parent who provided the most financial support to the student will be the contributor to the student’s FAFSA®.
  • If both parents provide equal financial support to the student, the parent who has the greater income and assets is required to be the contributor on the FAFSA®.

Tip : If the parent determined to be the contributor is remarried, the student’s stepparent will also be a contributor to the FAFSA® if they didn’t file their taxes jointly with your parent. 

4. Who needs an FSA ID ? 

All contributors on a student’s FAFSA® will need an FSA ID. In some cases, both parents will need an FSA ID or a stepparent will need an FSA ID.  

Tip : If the student’s parents are married, and file their taxes married filing separately, both parents will be required to be a contributor on the FAFSA®. Both parents will need an FSA ID.

Tip : Parents without an SSN may now make an alternative FSA ID. Learn more about that process here . 

5. What is the Student Aid Index ?

Student Aid Index (SAI) replaced EFC (expected family contribution) as the key measure of a student’s financial need, which colleges use to determine how much federal financial aid that they will extend to a student. In many cases, the SAI is also used to determine the amount of state and institutional financial aid will be extended to a student. Some important information about SAI: 

  • Many colleges have priority deadlines for financial aid. Be sure to submit your FAFSA® before any priority deadlines your college has.
  • The SAI is not an estimate of the amount of financial aid a student will receive, and it is not an estimate of the out of pocket cost a family should expect to pay. The SAI also does not imply any financial obligation for the student or parent.
  • A student who receives a negative or 0 SAI will be eligible for the maximum Pell Grant. A negative SAI means that the student has a more financial need that a student with a SAI of 0. A college may use this to prioritize how other grants with limited funding are distributed.  

6. What is the IRS Direct Data Exchange (DDX)? 

The DDX allows the IRS to share Federal Tax Information (FTI) with the Department of Education and the colleges listed on a student’s FAFSA®. This allows for an easier and faster FAFSA® application, and reduces the amount of errors on the FAFSA®. Some important information about DDX: 

  • All contributors to a student’s FAFSA® must consent to the IRS DDX when filing the FAFSA®. Failure to do so will result in a student not being eligible for federal student aid.
  • Even if the DDX fails to pull the FTI for a student or parent, they must still consent to the DDX. Even if the parent or student doesn’t file taxes, they still must consent to the DDX.
  • The 2024-2025 FAFSA® uses skip logic for questions that don’t pertain to the particular contributor, and this combined with the DDX means that many students and parents are not being required to answer many questions about finances. 

7. Am I a dependent student or an independent student? 

Dependent students are required to have their parent(s) as a contributor on the FAFSA®, whereas independent students do not need to have their parent(s) as a contributor ( Tip : Most students will be considered dependent). You are a dependent student if none of the following apply to you:

  • The student is currently serving on active duty in the U.S. armed forces for purposes other than training.
  • The student is a veteran of the U.S. armed forces. 
  • The student has children or other people (excluding their spouse) who live with them and receive more than half of their support from the student now and between July 1, 2024 and June 30, 2025.
  • At any time since the student turned 13, they were an orphan (no living biological or adoptive parent).
  • At any time since the student turned 13, they were a ward of the court.
  • At any time since the student turned 13, they were in foster care.
  • The student is or was a legally emancipated minor, as determined by a court in their state of residence.
  • The student is or was in a legal guardianship with someone other than their parent or stepparent, as determined by a court in their state of residence.

8. What does it mean to be “provisionally independent”? 

Provisional independent status is given to students who have unusual circumstances that impact their ability to pay for school. Unusual circumstances include:

1. If a student was at any time on or after July 1, 2023 unaccompanied and either (1) homeless or (2) self-supporting and at risk of being homeless. If a student was determined to be homeless or at risk of becoming homeless by the following entities, they will be determined to be independent, but if not, they will be provisionally independent.

  • Director or designee of an emergency or transitional shelter, street outreach program, homeless youth drop-in center, or other program serving those experiencing homelessness
  • The student’s high school or school district homeless liaison or designee
  • Director or designee of a project supported by a federal TRIO or GEAR UP program grant
  • Financial aid administrator (FAA)

2. A student may be experiencing unusual circumstances and be deemed provisionally independent if they:

  • left home due to an abusive or threatening environment;
  • are abandoned by or estranged from their parents;
  • have refugee or asylee status and are separated from their parents, or their parents are displaced in a foreign country;
  • are a victim of human trafficking;
  • are incarcerated, or their parents are incarcerated and contact with the parents would pose a risk to the student; or
  • are otherwise unable to contact or locate their parents.

Note : If the student’s circumstances resulted in not having a safe and stable place to live, they may be considered a homeless youth and should review the answer to the previous question about being unaccompanied and homeless.

Tip : If a student is determined to be a provisionally independent student, they will need to contact the financial aid office at the school to provide documentation to verify their circumstances. Until this step is completed, FSA will be unable to calculate the student’s SAI. Instead, the FAFSA® will provide an estimate of the financial aid eligibility as if the student is an independent student. 

9. Does the FAFSA take inflation into account? 

There are multiple reports that the 2024-2025 FAFSA® did not take into account the rise of inflation, and this may result in reduced student eligibility for financial aid. 

On January 23, 2024, NPR first reported the announcement that the Department of Education would make inflation adjustments to the income protection tables, resulting in students receiving an additional $1.8 billion in federal financial aid. On January 30, 2024, the Department of Education made a press release regarding the status of the FAFSA®. In this press release, the DOE announced that student FAFSA® data would not be sent to colleges until the first half March.

Note: Please read the latest news on the Department of Education’s decision to correct the miscalculation of inflation on the 2024-2025 FAFSA. 

10. Where can I get help with the FAFSA®? 

Pay less for college with going merry .

Need help navigating the other aspects of the college admissions process? Going Merry can help. We offer:

  • Tons of tips and resources. Learn how to nail your college essays, save on tuition, prep for the ACT, and more. 
  • A massive scholarship database . Get help paying for college with scholarships you’re automatically matched to based on your personal profile. Then, apply for them all in one place. 
  • Powerful financial aid insights. Understand your financial aid package, compare financial aid offers with our College Costs Insights tool , and choose the right school for you. 

Sign up for Going Merry today to gain access to all these tools and more. It’s fast, it’s free, and it could help you win up to thousands of dollars in scholarships.

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

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Russia's economic decline is in only in the early stages, and the country is masking significant 'degradation,' think tank says

  • Russia's economic decline is still in the early stages, according to a London-based think tank.
  • Talk of Russia's resilience ignores deep-seated issues in Moscow's finances.
  • The nation is losing a huge amount of human capital as war in Ukraine drags on.

Insider Today

Russia's economy has significantly more degradation ahead of it, according to the Official Monetary and Financial Institutions Forum.

The London-based think tank pointed to comments from some economists, who say Russia's finances are holding up amid its grinding war in Ukraine and sanctions from Western countries. Economists and experts note that Russia has proved to be seemingly resilient so far, with the International Monetary Fund recently raising its growth target for the nation to 2.6% from 1.1 this year. 

But talk of Russia's economic resilience is misguided, and there are deep-rooted issues that will continue to plague its economy, the think tank said.

"Russia is masking a process of significant economic degradation that will continue well into the future and further marginalise its global footprint," Mark Sobel, the US Chair of the OMFIF said in a note on Monday. 

Russia's robust military spending has been a key factor in propping up its economic growth so far. But a deeper look into the Kremlin's finances shows a far bleaker picture: Russia's global share of world purchasing power has fallen to under 2%, down from around 4% before the 2008 financial crisis, Sobel said. 

Meanwhile, there's evidence that Russia's energy revenues – a key source of income – are plummeting . Urals crude, Russia's flagship oil product, is now trading at a significant discount to the global benchmark. Russian oil traded around $68 a barrel on Tuesday, while Brent traded around $83 a barrel, according to data from Oilprice.com.

Countries also appear less willing to buy Russian crude since the West has resolved to enforce its trade restrictions on Russia. Over half of sanctioned Russian oil tankers are now idling at sea, Bloomberg reported this week.

That's complicated by a swarm of other problems Russia's economy is facing, such as roaring inflation, a weak ruble , and a record shortage of workers , which economists have warned will hinder future growth and productivity.

The country, for instance, is losing a huge amount of human capital as casualties mount on the battlefield, while younger educated Russians have fled the country, Sobel said. 

"Inflation is elevated and the central bank is maintaining high interest rates in light of the outlook for prices. That will erode real incomes and crimp investment," he added. 

Over 1,000 companies have publicly said they're withdrawing or scaling back operations in Russia, according to a list compiled by the Yale School of Management . Companies that have exited Moscow are unlikely to return anytime soon, Sobel added. 

"A cursory examination of current Russian data — such as growth and inflation – might suggest the economy is 'resilient' in the face of the costs of Russia continuing its ruthless invasion. That view may contain elements of validity in the short term. But even that overlooks weaknesses and realities," Sobel warned. "Significantly greater isolation and economic degradation is baked into the cake for the Russian economy and people."

A record 56% of Russians said they believed their economy was improving last year.

But people in Russia already appear to be feeling the pain of Moscow's ailing finances. Heating systems are now breaking down in parts of Russia , partly due to Moscow's immense military budget that's been unable to update Soviet-era infrastructure. Russian inflation grew 7.2% year-per-year in January, well above the nation's 4% inflation target.

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