TOPIC 1 - 1.6 THE OBSTACLES TO SUSTAINABLE PERSONAL FINANCES

TOPIC 1 - 1.6 THE OBSTACLES TO SUSTAINABLE PERSONAL FINANCES

1. Many obstacles can prevent someone from achieving a sustainable personal finances over a long term period. Most commonly these are -

   • Failing to make short-term, medium-term and long-term financial plans that are flexible.
     • Failing to make adequate plans to deal with unexpected changes in income or expenditure.
       • Failing to compare weekly or monthly income and expenditure against the amounts predicted. Failing to monitor.
         • Failing to make appropriate steps such as increasing income or reducing spending in order to avoid cash shortage.
           • If an individual sees that they are going to have a shortage of cash, they need to make changes to ensure that they do not fall into this situation.
             • Increasing income or arranging how much you are able to borrow could help. If the individual want to borrow money, they should only borrow an amount that they are confident they can keep up with monthly repayments.
         • A financial plan must be monitored so that the individuals plan is a success and does not fail. they also need to keep looking back on it to remind them of how much they can spend and where they need to remember to spend for example bills or regular outgoings.
       • if and individual does not have many savings this would mean they are not prepared if an unexpected event happens. if an decrease in income happens then the individual will have to adapt their spending and what they have to ensure they can keep living well.
         • If an increase in expenditure suddenly appears then they will also have to adapt their financial plans and spending habits to ensure they can live without getting into any financial difficulties such as debt as this would not help the individuals situation.
     • This could lead to not being able to have the money for an unexpected event whether this is long term or short term. for example falling ill, unexpected car payment, redundancy.
       • If an individual is make redundant then they could have no income for around 6 months. a personal loan or an overdraft may not help as they individual would still have to keep up with repayments or they could be taken to court.