Money is a given. As a basic requirement for meeting our basic needs, it simply has to be there. Whether it's for rent or food, a car or consumer goods, we can't live without money. But is the household money enough?
Household money: between piggy bank and consumption
Being able to manage your own finances to some extent should be as natural as being dependent on financial resources. But unfortunately, in reality, this is often not the case.
Many people know the feeling that their income has somehow vanished into thin air and suddenly they realize how little they have left to get through the end of the month.
The account balance is checked several times a day and a saving transfer is expected. But where do these difficulties come from in getting by with the available funds?
The household allowance
The term household money refers to the financial means from which an individual or a family earns a living. Income from wages and any other benefits, such as child benefit, are compared with expenses and must be brought into balance. Those who can calculate well and keep an overview can usually get by with what they have available. However, those who spend more than they actually could will sooner or later find themselves in trouble.
In addition to making ends meet, making the best use of household money is often a problem. Many people all too often have the impression that the money has simply disappeared without actually being used to buy anything.
Many of our expenses are actually unavoidable and offer little potential for savings. This is why we sometimes become less aware of our expenses. Rent, food and the telephone have to be paid and usually consume a large part of the household budget available.
The rest is available for less necessary uses that are no less important to us. In particular, it is often difficult to distinguish between wishes and actual needs, which inevitably leads to bottlenecks at the end of the month.
Many people are not even aware of the true state of our household budget. However, the reasons why it is so difficult to manage your household properly are usually very similar for those affected.
Household money and the debt spiral
A look at the statistics shows how serious the situation really is and that a lack of financial organisation is the rule rather than the exception. More and more people in Germany not only have problems managing their finances, but are also over-indebted. But what is the reason why more and more people are no longer able to meet their payment obligations?
Unemployment – the number 1 reason for debt
28 percent of people who can no longer support themselves and turn to debt counseling are unemployed. Statistically, single men in particular have great difficulty making ends meet with the money they have at their disposal.
Particularly in the case of sudden unemployment, not only the changed living situation, but also the loss of the usual income often demands a lot from those affected. On average, a third or more of the available income is often spent on rent. Many other monthly costs, such as repaying loans or insurance premiums, are also based on our income and are difficult to reduce immediately when unemployed. Those affected often lose track of their finances due to the great psychological pressure or even close themselves off to the problem.
Other strokes of fate, such as the death of a partner, illness or accidents, are also often the cause of a negative balance in the account, which all too quickly turns into a full-blown mountain of debt.
Consumer frenzy and financial traps
In many cases, however, unemployment and strokes of fate are not responsible for bottlenecks in the household account. A lack of overview of consumption behavior and setting the wrong priorities often tear a hole in the household budget and leave money tight at the end of the month.
The increasing variety of shopping options, deferred payments and cashless business transactions make it much more difficult to keep an eye on your own finances.
Purchases that used to be made with cash are now made online. Even the smallest amounts are paid with debit or credit cards, and even clothes and accessories are bought on installments. It is not surprising that many people find it difficult to keep track of everything. Not least because of the oversupply of supposedly good opportunities, bargains and payment methods, it is difficult to decide what is really needed and what is better to put on the wish list.
But even with a planned approach and a precise overview of what is needed, it can be difficult to keep track of income and expenses. Many everyday purchases are now made without cash.
It is easy to completely lose the feeling of having made a perhaps large expenditure. The feeling of spending money is no longer as great as when paying with coins and notes. And since debits from the checking account, especially when paying with a credit card, are not made immediately, it becomes increasingly difficult to keep track of what has actually already been spent.
It can quickly happen that outstanding bills are carried over into the next month and throw any existing budget into serious disarray.
Financial confusion is usually exacerbated when purchases are made online. Not only are payments made without cash, but the feeling of having made a purchase is also completely lost. Often, supposed bargains tempt you to buy more than you actually need.
The security of the living room at home and the anonymity of the Internet tempt people to spend money that is outside their own budget, and installment payments and purchasing on account also contribute to purchases being made that quickly lead to financial overload.
Even those who would never have asked the seller on site about the possibility of paying in installments will find it much easier to choose this convenient payment method from the comfort of their own sofa.
This not only makes it easy to buy things that are not necessary for daily use, but also leads to people overestimating their own financial situation by paying small installments that are supposedly within their budget.
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