Understand the root causes of debt
There are different barriers that contribute to debt issues. We looked at how to reduce debt in a previous article, but to really focus on improving financial stability, it’s important to identify and correct the potential root causes behind debt challenges. Let’s break down some of the tools for success.
Problems vs. symptoms
Debt itself is not the problem, but rather, the symptom. Think of it like having a sore tooth. The soreness is a symptom, but the problem (or “root cause”) is an infection. We want to treat the infection, not the soreness. Likewise with debt, we want to treat the issues behind it.
Digging deeper
For some, negative money habits can start due to mental health challenges. We’ll use the term broadly for the purpose of this article, since mental health is best left to medical experts. Negative money habits could include impulsive spending or overspending, avoiding financial priorities or using spending as a coping mechanism to deal with negative emotions.
When mental health conditions get left undiagnosed or untreated, it becomes almost impossible to move forward with both overall health and financial health.
Other root causes
Difficult or unexpected life circumstances can also be at the root of debt issues. These could be bad experiences that happened in the past or present, but financial debt is one of the results. Think of challenging life or family events such as divorce or illness.
Root causes even exist in our society, such as a lack of basic financial awareness or literacy. Things happen that are truly out of your control, like sudden unemployment in a job sector.
Circle of control vs. circle of influence
This concept can help equip you with tools to manage the triggers that come along the way. If we take the job market as an example:
-
Circle of control: Taking actions required to find a job – things like updating your resume and showing up for interviews – that’s within your control.
-
Circle of influence: What you can do to steer toward the desired outcome. The chances of getting a job offer are higher if you practice for the interview – that’s within your influence.
On the other hand, thinking about what’s outside our control or influence adds no value. Worry or concern over the number of jobs available, the bias of the hiring manager or the quality of other candidates is not something you can control, so don’t waste your time and energy thinking about it.
Make action plans
Taking action to fix the root causes of financial debt and to build healthy habits is as important as any action. Let’s say someone is struggling to manage their shopping impulses and needs to seek treatment from a therapist to address this habit. The action here would be to find a therapist!
A person can have both control and influence over self-care with actions like getting therapy or seeking online resources. When it comes to a good action plan, setting up SMART goals is a way to help keep you focused on controlling what you can.
Key takeaways: how to identify your own root causes and take action
-
If you have debt, write down the potential root causes
-
Think of actions you can take immediately to start correcting the pattern
-
Focus on what you can control and influence – and nothing else
Words of encouragement: be proud of yourself
None of this is easy, especially in matters of mental health and personal or family troubles. Most of us are not experts in addressing these challenges, and that’s just fine. Be kind to yourself, and recognize that you’re doing the work to solve this important piece of the financial well-being puzzle.