People who have difficulty handling money will have problems with money matters for the rest of their lives. People with high incomes with a hole in their hand can even get into big trouble more easily, compared to people with little income. Someone who earns a lot will adjust his life accordingly. The small apartment is sold and a more expensive terraced house is purchased. In the long run it turns out that with the current income it is even possible to buy a semi-detached house in a new neighborhood, so just sell the house and move again. This is a normal occurrence for homeowners. As a result, monthly costs increase along with the increase in income. There is nothing wrong with this! Problems arise when people go too far in this direction. People who live day by day spend their money without thinking about the consequences for tomorrow.
At a young age one must learn the value of money. Children need to know that money is something they should handle with care. They should not think that money is always available. When the pocket money runs out, it is no longer possible to spend money. On the other hand, they also have to learn that not everything is about making money. In practice, it often turns out that parents who always have money worries also unconsciously pass on their way of managing money to their children. It often does not matter how high the income is. There are families without debts who have to survive on social assistance benefits. On the other hand, there are families that receive more than 5,000 net monthly income, but they have large debts that they can no longer get out of.
Taking an advance on future income
A major danger is taking into account amounts that are yet to come. Taking an advance on holiday pay, for example, can result in shortages. In March they take out a loan for expensive luxury goods, with the idea of paying it off with the holiday allowance. In practice, however, it will turn out that the holiday pay will still be spent at the end of May on an unplanned holiday. In other words, the loan continues to exist, and additional costs will have arisen in the coming months in the form of interest and repayments.
Many debts have arisen due to a lack of overview and out of convenience. Paying for an expensive purchase with a credit card is easy, but you have to remember that you will repay the amount within the term. This is to prevent you from having to pay high interest charges. You must also have a clear idea of what you receive monthly and what goes out monthly. As soon as expenses are too high for income, you must take measures.
Learning from mistakes
Once debts have arisen, it is difficult to get out of them. In an emergency, you may have the option to turn to parents or other family or friends. It is important to realize at such a moment what caused the debts and to learn from it in the future. You need to solve the problem and create savings for the future. This is the only way to cope with major setbacks in the future. You can assume that there will be another setback at some point.