A self-made millionaire who studied 1,200 wealthy people found they're willing to admit an uncomfortable fact about money

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Contrary to popular belief, "everyone has the same opportunity to acquire wealth," says self-made millionaire Steve Siebold , who has also studied more than 1,200 of the world's wealthiest people over the past 30 years.

In his research, he found that rich people are willing to admit something about money that makes many of us uncomfortable: It can solve most problems.

It can be uncomfortable to accept that money, rather than being the corrupting force it is often portrayed, can serve as a useful tool that creates opportunities, options, and happiness, but that's what the wealthiest people do on a daily basis — and it allows them to generate more wealth. 

"If you want to start attracting money, stop seeing it as your enemy and think of it as one of your greatest allies," Siebold writes .

"It's a friend that has the power to end sleepless nights of worry and physical pain, and can even save your life ... Start telling yourself on a daily basis that money is your friend and a positive force in your life, and your mind will go to work to help you acquire more."

While average people see money as a necessary evil and let it stress them out, rich people find wealth reassuring, says Siebold : "The world class sees money as the great liberator, and with enough of it, they are able to purchase financial peace of mind."

does money solve problems

Watch: Meet the 26 year old jeweler making it big hawking custom bling to celebrities on Instagram

does money solve problems

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Finance Over Fifty

Money Is Important: Here Are 15 Powerful Reasons

Rolled up cash representing why money is important

Table of Contents

Why is money important?

We all know that money is important, but have you ever wondered  why ?

There’s no doubt that money affects many areas of our lives. On one hand, we can owe some of our greatest experiences to the money we had to pay for them. On the other hand, we can feel so much stress and anxiety over our financial situations.

If you’ve always struggled with your finances, you might see money as a scarce resource that keeps you from being happy. Or, you might see it as some elusive goal that you’ll never achieve.

On the flipside, you may be overly driven to make more money because you think it will solve all of your problems. You dream of all you’ll do when your bank account has a balance with 5 or 6 zeros and the happiness you’ll finally have.

I’m sure you would agree that the role of money plays an important part in how we all live. It has the capacity to open up amazing opportunities that can change the entire course of your life.

So, it’s important to have the right perspective about money and not merely dismiss it as something that only seems to create problems for you – or as the one thing that will make all your dreams come true.

When you have a healthy mindset about why money is important, you can understand its true value in your life and the possibilities it can provide.

You’ll realize that money itself is just a neutral, unlimited resource that’s available to anyone who is willing to control it. It doesn’t exist to make your life miserable and it certainly can’t buy your happiness (or can it? more on that later ).

In this post, I’ll go over a few reasons why money is important, as well as how it can make some things easier, what problems it can create, and how much you really need.

Why do I need money?

This might be a silly question to think about (as you stare at your credit card bill), but it’s helpful to challenge your assumptions about money.

For most of us, money is absolutely a necessity. We need it for shelter, food, and clothing. Without these basics, your life would be in serious trouble. Money is the resource that allows you to attain a certain level of security and safety. To a certain degree, money helps you survive.

Now, that’s pretty important!

However, it can be easy to forget the significance of these basic necessities when you’re worried about how you’ll make your car payment this month. (When you feel your anxiety rising, focus on the fact that your money is allowing you to have a roof over your head and food on the table. Thanks, money!)

Beyond the basics, there are many benefits of money including freedom, comfort, and providing an unlimited number of opportunities to enhance your life. This is where many people get tripped up and start spending more money than they make. They see money as something that can buy them a little excitement or enjoyment now, instead of a means to build a financially secure future.

Money can do either, or both. It doesn’t care. It has no control over how you use it.

Money is simply a tool that can work for you or against you.

So, if you want to increase your financial literacy and maximize the benefits of money in your life, it’s critical that you learn how to use it properly.

When you learn better behaviors around money, its importance in your life will be evident in the freedom and choices available to you. Let’s talk about some of those.

15 reasons why money is important

When it comes to money, the more the better – right? After all, more cash means more stuff.

But, just having a nicer car or bigger home doesn’t give us deep fulfillment in life. So, why is money important, and why do we all want more of it?

Let’s go over 15 of the main reasons money is important.

does money solve problems

1. Money is important because it gives you freedom and control

As an American, I am thankful for my freedom. I’m not restricted to what I can say, what I can believe, and whom I can worship.

However, as important as these things are, they don’t pay the bills. And, if I don’t have enough money, I am greatly restricted to where I can live, what I can eat, and how I can spend my time.

Without enough money, your freedoms are limited and you may even have to spend most of your time working just so you can cover the basic necessities. What little control you have may end up making you feel out of control.

Most people that don’t have enough money usually go into debt. Credit card bills and payday loans keep you from living in financial independence and hold you back from achieving your life’s dreams.

2. Money is important because it gives you options in life

Having access to money in the bank opens up more options for you. When you have enough money, you have more choices with the neighborhood you live in, the car you drive, the restaurants you eat at, and even the health care you choose.

Feeling stuck in your circumstances can be frustrating and discouraging. Money is important because it allows you the choice to change careers, move to another city, or buy a more reliable vehicle. 

3. Money allows you to pursue your passion

If you have to work two jobs just to pay the bills and cover your credit card debt, you won’t have the time or energy to go after your dreams.

It’s important to have money that gives you the breathing room to pursue your interests. You need to invest in yourself if you want a fulfilling life.

4. Money is important because it provides security

Financial stability comes with a lot of benefits, including a sense of security and peace of mind. When you have more than enough to pay your bills and stash some away, you don’t have to deal with financial worries about how you’ll survive.

You don’t need a lot of money to live securely, but you need enough to pay your bills and save an emergency fund to cover 3 to 6 months of living expenses.

Knowing a small emergency won’t turn into a crisis will give you the sense of security you need to make good financial decisions.

5. Money can provide valuable opportunities for your children

We all want the best for our kids, and money can help us provide a quality education to give them a good head start in life.

Private schools are expensive and usually out of reach for the family living paycheck to paycheck. This typically leaves the local public school as the only choice for hardworking parents who both have to work to get the bills paid. As a result, there is little choice or control over the quality of education and after-school programs their children have access to.

When you have the money, you can afford a better education, private lessons, tutors, and coaches. These additional opportunities give your kids the chance to pursue their interests at a young age and develop skills that give them an advantage in adulthood.

Of course, there can be a fine line between giving your kids an advantage in life and creating entitled little people. When you have the money to give them more choices, play a key role in their lives by teaching your kids about money and the value of hard work. 

6. Money helps you make more of it

The more money you can invest, they more you’ll have in the long run.

If you can find the money to buy real estate, invest in the stock market, and save in a tax-advantaged retirement account, then your money will grow.

Then, when you retire, you can benefit from passive income sources to support you through your golden years.

7. Money is important for giving back

Money is important because it allows us the opportunity to give back to the world we live in. Most people have a desire to be generous but have gotten stuck in a scarcity mindset because they’re always worried about money.

When you live on a tight budget, it’s easy to stay focused on making sure your own needs are being met. There’s little left to help others who are struggling more than you.

When you have financial freedom, you can be generous without being concerned about your own needs. You can get your focus off of yourself and give financial support to the people and causes you value.

does money solve problems

8. Money gives you the chance to live life to the fullest

Living life to the fullest can mean different things to different people. Of course, you can have a very full and satisfying life without being rich. It all depends on what brings you fulfillment.

I love to travel, so a “full” life for me would include lots of vacations to foreign countries. This would require a lot of extra discretionary income. My husband, on the other hand, doesn’t really care about going overseas. He’d rather go on road trips or camp out by a lake, both of which don’t cost a lot of money.

Either way, money is the commodity that allows you to create the experiences that enrich your life in meaningful ways. Sometimes you have to have it to do the things that bring you joy.

From traveling to education to learning new skills, money provides the freedom to pursue your passions and live life to its fullest. Without it, your options become very limited.

9. Money can buy happiness … if you spend it right

Can money really buy happiness?

In past research, it’s been shown that money and happiness do, in fact, have a positive correlation. However, the relationship is weak and only leads to more questions. What if you have bad spending habits? Does it matter what you spend it on?

Research has shown that it does. Specifically, if you use your money on experiences versus possessions, and for helping others, then you can experience more life satisfaction.

[put (partial) YT video here: https://www.youtube.com/watch?v=JLfKZCzkBDs]

10. Money can provide a higher education

There are many careers that require a college degree. If you want to climb the ranks in the business, legal or medical fields, then you’ll need at least 4 years at a university.

The average in-state tuition for four years at a public university in 2021 was $43,000. For out-of-state residents, this cost was almost 2.5 times the amount.

College is expensive .

But, if it’s part of your big dream, you’ll need money to get there.

11. Money is important for your health

If you’ve ever had to pinch pennies to make the rent, then you know how finances can be stressful. A little stress now and then isn’t a bad thing, but it can really damage your physical and mental health if it becomes a way of life.

Financial stress often leads to depression and anxiety. Some get trapped in bitterness and a victim mentality. Many choose to give up any hope that they’ll ever get out of debt or find a better paying job. They’re so focused on just getting by that they never find any fulfillment in life.

Chronic stress can lead to physical health problems, such as risk of heart attack, insomnia, weight gain, and a weakened immune system.

It’s important to have stability in your finances so you can reduce stress and increase your quality of life.

12. Money is important for community needs

Organizations that serve the community through homeless shelters, food banks, welfare programs, and public health facilities, need money to run effectively. These funds are often raised through private donations and fundraising events. 

Without this money, there are many people in the world who would go hungry and not have the medical care they need.

13. Money is the difference between surviving and thriving

Some people spend their entire lives stuck in a paycheck-to-paycheck cycle. This leaves them without any room to get ahead because they can barely cover basic living expenses.

Having additional money gives you the ability to live below your means, put some in savings, get out of debt, and pursue your interests. It takes you from just surviving through life to thriving in life.

14. Money is important to make quality purchases

Have you ever settled for the cheap option because you didn’t have enough money for higher quality?

I did this a lot in my younger days. Cheap furniture, cheap clothing, cheap electronics. Just because I couldn’t afford to pay for better quality.

Inevitably, cheap purchases end up costing you in the long run. They don’t last as long, they’re unreliable, and you have to replace them sooner.

Money is important to make quality purchases that will last, so you’re not wasting money on the cheap stuff.

15. Money makes life easier

There once was a time when bartering was the only way to shop. If you wanted a new cow, then you needed to offer something of similar value to the seller.

Thankfully, money was created to make these transactions more fair and efficient. It’s the universal means to exchange goods, which makes life so much easier!

Money can solve problems – but not all of them

If you’re always pinching pennies, you may fall into the belief trap that more money would solve all of your problems. More money can definitely be a welcome rescue from financial emergencies, but there are many issues in life that can’t be fixed with cash.

Money can fix your car after it breaks down so you don’t lose your job. Money can pay for the medicine you need for your child’s asthma so they can play sports. Money can replace your broken fridge so you have a place to keep food for your family.

Money is important because it *can* solve many problems in life very quickly and easily.

But, money can’t fix anything that doesn’t require an economic exchange. This means you can’t use money to solve problems like:

  • Your broken relationship with your mother
  • How many true and deep friendships you have
  • The health of your marriage
  • Your insecurities
  • Earning respect from others
  • Having the courage to confront someone

Money is important because it can work as a tool to help you improve in these matters. But, you won’t find resolution in these areas until you work on your own character issues and personal growth. No amount of money in the world will give you a fulfilling marriage or genuine friendships.

Money can also create problems

If you don’t have a firm grasp on what you truly value, then money can quickly become a priority that negatively affects your life.

Let’s go over a few problems that money has the potential to create. Being aware of the negative aspects of money will help you keep your finances in perspective.

Giving money too *much* importance

The bible says where your treasure is, there your heart will be also . When you make money your treasure, it can become more important than people, health, integrity, and even God.

Some can mistakenly believe that money is the root of all evil because they misquote that famous verse in the bible that actually says “the love of money is the root of all evil.”

Money in and of itself has no ability to create evil in the world. It’s *how* we feel about money that can cause great damage.

Throughout history, the love of money has destroyed marriages, broken friendships, caused jealousy and rage, and even led to murder and suicide. Some are so driven to make more of it that they lose everything most important to them.

Although money is important for many things, we must remember that it’s only a tool to serve us. Once it becomes the master, we lose control and become enslaved to the consequences that result.

Money is often the cause of stress

I mentioned earlier that having money is important to reduce stress in your life. However, it’s possible that too much can end up creating stress for you.

If you grew up in a lower-income family, you may have developed an unhealthy mindset around money. The fear of living in poverty again can drive you to work too much or live like a cheapskate. This can keep you in a perpetual state of stress and anxiety around money.

Money is important, but having a healthy money mindset is critical to enjoying your wealth.

Money can create divisions in relationships

Unfortunately, money can really bring out the worst in people. Disagreements in financial matters are a common cause of divorce, lawsuits, and strained family relationships.

It may be as simple as different spending habits, or as complicated as the distribution of an inheritance. When it comes to financial conflicts, you must decide what’s more important – the relationship or the money.

If you and your spouse often have money fights, do what you can to find common ground. Have a financial goal that you can move toward together, but also give each other the space to express your individual money values.

does money solve problems

So, how much money is enough?

Because we live in a world where we rely on money for food and shelter, we will always be in need of having some. But, how much is enough? And how do you make sure you don’t run out?

Putting a figure on what’s sufficient for you is a personal choice. If you’re satisfied with a simple life and you keep your financial obligations to a minimum, you could live on relatively little. But, if you have your heart set on a vacation cabin in the mountains, paying for your kids’ college education, and retiring a millionaire, then you’ll obviously need more.

Setting financial long-term and short-term goals is a smart habit that will tell you how much money you’ll need for the things you want. When you’re intentional with financial planning, you have a direction to focus on and the steps you need to take to get there.

Other effective money habits include developing good money management skills and a healthy mindset . These both will help you strengthen your financial future. Learning how to budget , avoiding debt , and saving money will greatly increase your chances of not running out in retirement.

Just be careful to not get trapped in the belief that more money means greater happiness. In 2018, Purdue University published a study that revealed the point at which a greater annual income no longer had emotional benefits. The study found that once a person makes $75k a year, any increase in income actually tends to reduce life satisfaction.

Have a clear understanding of what you truly value and the vision you have for your life, and let those two priorities inform your financial goals and decisions.

What’s more important than money?

It’s probably not difficult for you to answer this question for yourself. But, it is important that you always keep your priorities in order. Otherwise, money can slowly start to create some of the problems mentioned above.

One way to maintain a healthy perspective of money is by keeping a gratitude journal. Take 5 minutes every day to write down 3 to 5 people and things that you’re grateful for. This will keep your focus on what you already have, instead of all the stuff you think is missing from your life.

Here are a few ideas you could add to your list:

  • The relationships in your life
  • Your health and well-being
  • The lessons and experiences your life has given you
  • The wisdom you’ve gained through the years
  • Your ability to keep learning and growing as a person
  • Your church and your faith

When you foster gratitude, growing, and giving on a consistent basis, it’s easier to keep money in its rightful place – as a tool that’s meant to serve you and support your efforts to create a fulfilling and purposeful life.

In conclusion: Money is important to live the life you want

No matter what life you want to create for yourself, you need money to make it happen. That’s why it’s important to practice good money management habits, and live below your means so you can save for the future.

Money can’t buy you happiness, but it can help you acquire things and experiences that create much joy and satisfaction for you. It can help you pursue your passions and purpose in life. And, it allows you to be generous and supportive of others in need.

Money is important to live the life you really want. To reach your goals and realize your dreams. So, take control of your finances and learn how to use it as a powerful tool in your life. Align your goals with your values and know your own answer to the question: why is money important to me?

Then, you’ll learn to master money instead of money mastering you.

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  • 18 Tips To Successfully Live Below Your Means (And Still Be Content)
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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.

does money solve problems

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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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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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.

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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

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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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Want to solve society’s most urgent problems? Cash prizes can spur breakthroughs

does money solve problems

Research Associate at the Institute for Social, Behavioral and Economic Research, University of California, Santa Barbara

Disclosure statement

Luciano Kay's work on prizes has been supported in part by the U.S. National Science Foundation under Award Numbers 1734767 and SBE-0965103 and a research stipend from The IBM Center for the Business of Government. Any opinions, findings and conclusions or recommendations expressed in this article are those of the author and do not necessarily reflect the views of the National Science Foundation or The IBM Center for the Business of Government.

University of California, Santa Barbara provides funding as a member of The Conversation US.

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Innovation is a critical part of tackling problems in areas as diverse as transportation, housing, public health and energy. But the scientists, inventors and entrepreneurs who might generate creative solutions often investigate issues or pursue economic opportunities in other less urgent fields. Incentives for science and innovation try to steer efforts toward the most pressing societal problems.

Prizes – cash rewards for scientific, engineering and other achievements – are one form of incentive that has been around for a very long time. In the 18th century, for example, organizations such as the Royal Society in the U.K. awarded medals to scientists for their breakthrough research .

Today, in addition to this type of scientific award, there are also prizes for solutions to diverse problems, including the invention of new transportation means for disabled people , the engineering of new battery recycling methods , and even the development of technologies to treat COVID-19 patients . A new Earthshot Prize , which Prince William recently announced, will award 50 prizes worth 1 million pounds each over the next 10 years. It’s one example of a monetary prize used as incentive to develop solutions to pressing global environmental problems. There are also “open innovation” websites, such as InnoCentive , that companies use to source ideas and inventions from thousands of problem solvers in exchange for prizes.

All these prizes seek to focus creativity and investment by attracting the smartest and most creative people who, with the right incentive, might focus on the highlighted problem and in turn come up with amazing breakthroughs. Researchers like me work to determine how effective these prizes really are as drivers of innovation.

people on stage holding awards

Reward past achievements, motivate future breakthroughs

There are two main types of prizes. Scientific awards, which include both historic medal awards and the more recent Nobel Prizes, for example, are a retrospective recognition for outstanding contributions to science rather than an incentive to embark on one specific line of inquiry. To award them, every year, a number of judges examine the achievements of the nominees and pick winners.

Grand prizes, in contrast, offer rewards to the first participant who achieves a particular feat that is of interest to the prize organizer. For example, in the 1990s, the Ansari X Prize offered US$10 million for the first private manned spacecraft that went to space twice within two weeks. Participants had to meet these specific criteria to be able to claim the prize, which ultimately sought to promote space tourism . Generally, this type of prize names a single winner who takes home all the prize money. But sometimes there are smaller second and third prizes too.

Thanks to the Ansari X Prize and other popular competitions like the $30 million Google Lunar X Prize for Moon exploration and the $5 million DARPA Grand Challenges for the development of autonomous vehicles (all case studies that I investigated), companies, governments and nonprofit organizations began using prizes more actively and, with help from the internet, made them more popular and exciting.

astronaut stands on top of SpaceShip One holding American flag

Analyzing prizes’ effects on innovation

When I started researching how competitions work as incentives back in the mid-2000s, there was little empirical evidence, even though prizes have been around for a very long time. Since then, research has helped untangle the way prizes work and their potential to encourage science and innovation .

Studies have found, for example, that the motivations to compete for prizes are as diverse as the people and teams that participate. Bigger cash prizes help attract media attention and more participants, but also draw innovators with the possibility of finding a new job, the chance to learn about science and technology, or simply the opportunity to participate in a project that could help change the world.

Prizes compete with other more prevalent incentives for the innovators’ attention and efforts in today’s globally connected and fast-paced world. Prestige, for example, is a very important motivation in science , and lucrative markets drive innovation within companies.

The evidence also shows that new grand prizes attract new investments and may also raise awareness of important problems and influence the direction of ongoing research. Engaging notable figures, leaders and partners, as the Earthshot Prize does, helps to promote the mission of the prize and attract even more interest. Participants who have no scientific or engineering experience might still contribute novel ideas and solutions in prizes that have fewer eligibility requirements and attract more diverse contributors.

Note that since prizes pay only for results – the winning solution – participants need to be resourceful and actively seek support from friends, family and investors.

So, well-designed prizes can stimulate more creativity and innovation, but whether they achieve certain goals ultimately depends on who participates and the broader economic conditions when prize competitions are held. The Google Lunar X Prize, for example, was a fairly open competition and attracted diverse participants, including some who probably didn’t have the skills and experience to complete a lunar mission. The financial crisis of 2008 and its aftermath made fundraising even more difficult for them.

man holding plaque beside a model of a robotic spacecraft

Making prizes more effective

There are at least two important questions that researchers could investigate next so that companies, governments and other prize organizations have more insights into the potential of prizes to accomplish their goals and foster creativity and innovation.

First, how can one systematically measure the impact of prizes? The very nature of prizes makes them difficult to evaluate . For example, volunteers, part-time participants and indirect investments are sometimes not accounted for, which gives an incomplete picture of their true impact.

Second, what are the best cases in which to use prizes? Conflicting views in favor of and against grand prizes for COVID-19 solutions provide just one example of how little is known about when it is the right opportunity to use this type of incentive. Grand prizes have helped develop space technologies, for instance, but other areas such as COVID-19 solutions, cancer research or climate change mitigation might require other types of prizes or entirely different incentives.

Today, prizes are just a small part of the diverse motivations of scientists, inventors and entrepreneurs to come up with new ideas and technologies. Figuring out more about how prizes fit within this ecosystem will unlock their full potential and make them more effective incentives for science and innovation.

This story was updated to include mention of the Earthshot Prize.

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5 Simple Steps to Resolve Money Problems

Money problems can take many forms..

Posted April 23, 2019

Money problems can take many forms. You might be swamped with debt, struggling to save or pay for college for your kids or worried about outliving your resources in retirement . (Retirement? What retirement?)

Maybe you’re confused by a bewildering array of options and so you do nothing, which just adds to your stress and deepens the hole you find yourself in.

But money problems are just itching for solutions, if you have the foundation, courage and focus to make changes.

By foundation, I mean the basic knowledge you need to understand how to make financial decisions that move you toward the life you value.

If your first reaction is, "Whoa—I don’t know much about the fine points of money," you’re not alone. Here’s a quiz to give you a quick idea of how firm your financial foundation is right now.

Answer each with either TRUE or FALSE:

  • Spending more than I can afford (adding to debt) reduces my financial well-being. ___
  • The more debt I carry, the more difficult it is to save. _____
  • Spending on things I do not truly value is likely to lead me into trouble. ___
  • Having a liquid emergency fund is prudent for unexpected expenses or situations, like a major home repair or losing my job. _____
  • Investing in risky assets is a dangerous strategy for money I’ll need in the short-term. ___
  • Protecting my most valuable assets (health, family, property) is important. ____
  • I should have a Will and Powers of Attorney in case I die or become incapacitated. ____
  • Filing my taxes on time is important. _____
  • My portfolio should support my situation and future plans as well as my risk tolerance and time horizon. ____

If you answered TRUE to these questions, your foundation is on its way. If you answered FALSE to any of these questions, send me an email with your thoughts.

You can hire someone to help you with the foundation ( here’s a list of fee only financial planners), or you can educate yourself on the fundamentals. But once you have that firm foundation, you can follow these five steps to work your way out of money problems.

Define the problem—you can’t solve what you don’t acknowledge. What’s happening that’s causing you financial difficulties, stress and worry? Writing it down will help bring clarity (and stop that endless loop going on in your head).

Know what you don’t know. Identify and sort through what you know from what you don’t. For example, you might know that you’ve got $10,000 in credit card debt, but you’re not sure the best way to dig yourself out.

Explore resources. Whether you hire a professional to help you or commit to learning from books, courses and articles from trusted sources, find the answers and/or solutions to what you don’t know.

Create an action plan. Write it down and put it where you can’t avoid seeing it every day. If you don’t act on your goals and plan, nothing changes.

Track your progress. Measure your headway, celebrate your wins, and make adjustments or course corrections, as you need them.

These steps aren’t complicated, but they require your personal resolve, courage, to keep on track. Missteps and challenges are not fatal. They test your desire to reach your goals—the best thing you can do with a mistake is learn from it.

Your resilience and support from your personal and professional team will get you through those moments of doubt or mistakes.

Given how complicated life is, keeping your focus on a simple, direct and clear action plan is your best ally to success.

Michael F. Kay

Michael F. Kay is a Certified Financial Planner, practitioner and CPA. He is the president of the firm Financial Life Focus.

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Home     expert insights     The power of wealth: Can money really solve your problems?

The power of wealth: Can money really solve your problems?

Money takes away your problems, or so the saying goes — but what does that really mean?

By Michael Yardney

Published 14 Apr, 2023

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Can money really solve all of our problems?

While it’s true that money can’t buy us happiness, it can certainly make life a lot easier.

With enough money, we can pay someone else to take care of our problems for us.

We can hire a handyman to fix that leaky tap or a personal chef to prepare healthy meals for us.

We can even hire a therapist or life coach to help us work through our personal issues.

The real value of money lies in what it gives us – time

Time is the most valuable commodity in the world, and money can buy us more of it.

When we have enough money, we don’t have to spend our time working to earn more of it.

We have the freedom to do what we want with our time.

Time freedom is what defines wealth

It’s the ability to live life on our own terms, without the constraints of financial worries.

And with this freedom comes the ability to give our problems the time they need.

Think about the last time you had a problem.

Did you have the time to give it the attention it needed?

Often, problems are simply a lack of time.

You know what you need to do to solve them, but you just don’t have the time to do it.

When we have enough money, we can make time for the things that matter most to us.

For example, let’s say you have a nagging injury that you need to address.

With a busy work schedule, you may not have the time to go to physiotherapy or take a break from exercising.

But if you have enough money, you can afford to take time off work to focus on your recovery.

You can hire a personal trainer or physiotherapist to help you get back to full health.

This is just one example of how money can give us the freedom to solve our problems.

It’s not about throwing money at our problems – it’s about using money to buy the time we need to address them.

Money can’t solve all of our problems

Of course, money is not a guarantee of happiness or fulfilment.

It’s possible to be wealthy and miserable, just as it’s possible to be poor and happy.

But the freedom and autonomy that come with wealth can give you the space to pursue the things that truly matter to you.

I’ve often said: any problem money can solve isn’t really a problem.

So if you’re creating a vision of the life you want to create, consider adding this to it: With wealth comes the freedom to give your problems the time they need.

It’s a beautiful thing.

As I said, money can’t buy happiness , but it can give you the time and freedom to pursue it.

So if you’re working hard to build wealth, remember that it’s not just about the money. It’s about the time and freedom that money can provide.

It’s about the opportunity to pursue your dreams and solve your problems in a way that aligns with your values.

And it’s about the peace of mind that comes with knowing that you have the resources to create the life you truly want.

Photo by Karolina Grabowska from Pexels.

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Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.

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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.

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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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does money solve problems

9 Problems You Can't Solve With Money

does money solve problems

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No matter how limitless your budget and how strong your arm, there are certain times when throwing money at a problem simply won't help. So take a look at the list below and ask yourself: Are you facing a situation whose solution might require thought and effort, as opposed to more bankroll? (See also: Your Money Problems Are Your Own Fault )

1. A Failed Relationship

A lot of relationships founder on the shoals of money issues, but even those can't be healed by throwing money at them — what they need is mostly better communication plus a generous dollop of willingness to compromise. And if the relationship problems aren't related to money, throwing money at it won't help at all.

2. A Mid-Life Crisis

It's a cliche of the mid-life crisis for a 40-something man to buy a red convertible, but it's not a purchase that's going to solve existential angst. Of course there's nothing wrong with buying a red convertible if you want one, and can afford it. It just doesn't solve any problems. (Not even the practical transportation problems that could be solved with a more practical car, really.)

3. Getting in Shape

Buying a gym membership does not improve your fitness. Neither does buying a treadmill, stationary bike, or elliptical machine. Regularly including appropriate aerobic, resistance, and flexibility exercise among your daily activities gets you into shape. (See also: 5 Ways to Turn Your Walk Into a Real Workout )

4. Acquiring Skills and Talents

Getting good at something is largely a matter of practice, and money is no substitute. Of course you can spend money on books, on classes, on workshops, and on tools, and all those things may be of some help, but they're not going to give you skills if you don't put in the time to develop the expertise (and they're certainly not going to give you talent).

5. Becoming Enlightened or Even Just a Better Person

There are always hucksters pretending to be one sort of spiritual guide or another, willing to take your money and show you the true path. There are also people ready to suggest that donating money to worthy causes makes you a better person. You can be confident that neither of those things is true.

6. Natural Disasters

It's very reasonable to spend money in advance of a natural disaster, to make yourself more prepared. A well-supplied pantry can really help you through something like a blizzard or a flood or an earthquake. The right tools and right supplies can turn a disaster into an inconvenience — or even an adventure. Money can also help some after a disaster is over. But no amount of money will turn back a lava flow, or get a commercial jet to fly through a volcanic dust cloud. (See also: 5 Emergency Situations You Must Prepare For )

7. Being Blackmailed

You know giving in to a blackmailer's demands just lead to more demands, right? You've seen this movie.

8. Wanting the Impossible

I'd like to spend the next 2000 years learning to be the world's greatest musician, greatest swordsman, and most eloquent Esperanto speaker, and then travel through time to play, fence, and argue with everyone history suggests might have been better at those things than I. Throwing money at that problem will not solve it — nor will it produce world peace, end hunger (or death, or disease), let me travel faster than the speed of light, or meet friendly aliens from other worlds.

9. Being a Happy Person

Money can buy things that you want, and money can certainly solve some problems — and if those problems are making you unhappy, then in that sense money can buy happiness. But research shows that happiness comes from other things . Things like doing good work and having the respect of your peers — things you can't buy with money.

The Three Questions to Ask

So, when is throwing money at a problem the right choice? I tend to ask myself these three questions before I decide to throw money at a problem.

1. Is the Cost Bounded?

That is, can you know up front how much money you're talking about? Is it a one-time expense, or would you be taking on a new recurring monthly expense?

It's easy to make the necessary cost-benefit analysis of a single payment. You have the information you need to decide if the cost is worth it — and if you can afford it.

If you're looking at solving a problem by signing up for a new recurring monthly expense, you're potentially talking about a lot of money. You're also making the analysis a lot tougher.

None of which is to say that recurring monthly expenses are never the right answer. Everybody has recurring expenses, and they're a perfectly reasonable way to cover the basic costs of living. But when you're talking about throwing money at a problem, you're usually talking about something less basic (and less long-term) than, for example, solving the problem of being homeless by renting an apartment.

does money solve problems

The "being a happy person" problem fails this test, because even if this or that purchase would make you happy for a moment, no purchase will make you happy forever. The "being blackmailed" problem fails it as well.

2. Will the Money Solve the Problem?

Arguably, this ought to be the first question. If money won't solve the problem, then there's no point in throwing it — or even spending it. But in my experience, this question is so often hard to answer, while the other is so often easy, I find it makes sense to start with the other. If you answer that one to your satisfaction, then you come to this one.

What makes it hard to answer is getting a clear understanding of the problem.

For example, your car has broken down and you can't get to work. That's a problem where throwing money at it — paying to have your car repaired — may be reasonable. But don't stop your analysis there. To come to the right decision, you need to be sure you're getting to the fundamental problem. In this case, the real problem is that you don't have reliable transportation.

That's important, because making a needed repair does not always turn a car into reliable transportation. If this is just the most urgent of a list of needed repairs, maybe you need a different solution — a new car, or a good bicycle, or a bus pass, or an apartment closer to where you work, or a job closer to where you live.

Most of the other problems listed above — terminal illness, failed relationship, midlife crisis — fail this question.

That result is often heartbreaking, but it doesn't change the fact that whole categories of problems — medical problems, personal problems, political problems, social problems — often cannot be solved with money.

Save your money for the problems money can solve. Solve those other kinds of problems (if they can be solved) on their own terms.

3. Is There a Good Chance You'll Get the Money Back?

This is really a secondary question, after evaluating the cost of solving a problem with money. If a problem is clearly solvable, and the solution is easily affordable, you're probably not even thinking about it in these terms. (If the problem is that you're out of flour, and there's a grocery store a few blocks away that will sell you nearly unlimited quantities for less than a dollar a pound, then buying a bag of flour doesn't really rise to the level of throwing money at a problem.)

The third question becomes important when the cost of solving a problem with money is so large as to be a major factor in your budget — or especially if it will significantly impact your wealth.

Probably the most common circumstance is when you've sent a check, but it has gone astray. If you're dealing with a reputable counterparty, especially one with which you have an ongoing business relationship, it's usually fine to just pay again. Eventually one of two things will happen. Your first check will probably turn up and whoever has gotten paid twice will refund the extra payment (or credit it to your next bill). Or, if it never turns up, the money will never have left your bank account. (This is a good reason to pay by check. If an electronic debit or money order goes astray, you'll have to involve your bank in tracking the money down.)

Another common situation where there's a good chance you'll get your money back is when you have insurance. If your house burns down, your insurance company will probably pay necessary temporary housing expenses. If you're sick, your health insurance will probably pay necessary medical expenses.

Many times while traveling on business, I threw money at a problem, confident that my employer would reimburse me for those expenses along with my other business travel expenses — a legitimate move, because the money was solving a problem for my employer as much as it was solving a problem for me.

So sometimes, throwing money at a problem is the right move. But asking yourself these three question beforehand is always the right move.

How do you decide if money is the answer to a problem? Please share in comments!

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Nice article, it really made me reflect on what woes I do not have...versus focusing on what else I could acheive. Sometimes avoiding pain > attaining pleasure.

My only concern was the point about Becoming a Better Person. I think that donating CAN be a way to fulfill oneself, but not if you're just donating to organizations that remove you from the cause. In our privileged society, many of us don't know 'poor people' or those in need--not due to financial irresponsibility, but actual need--so giving someone like that money, after probably searching them out, can be very fulfilling. (Heck, even if they were financially irresponsible, its still an opportunity to help someone in need).

A quote from Muslim scripture, a saying of the Prophet Mohamed goes: "The giving hand (in charity or aid), is better than the receiving hand."

...this basically means that although not fulfilling one's own responsibility is a negative, giving and helping those in need is an opportunity for a great positive.

Obviously, I hold this opinion dear, and in my own life have tried to seek out opportunities to help people, who otherwise may not be known as 'needing help.' I don't feel it makes me enlightened, but I know it definitely feels fulfilling, as opposed to keeping up withe Jones' ...and no one can ever keep up!

Guest's picture

I much enjoyed this kind of article - it made me reflect to how I spend my own money. I digress on throwing money for solving a medical problem - as a physician myself I have witnessed firsthand the difference money AND education can do regarding the same disease with the same correctly prescribed treatment. Many excellent drugs and vaccines and devices we use today were created by people throwing money - lots of it- to solve a certain problem. Of course, I've seen the opposite too: rich patients throwing money for tests they don't really need when their fortunes are causing an imbalance in their lifestyle, e.g. affording tobacco or steaks every day.

Guest's picture

I have thought about having more money for all of those scenarios. Number 6, I have spent a great deal thinking about. When there were all of those tornadoes in the mid west two years ago, I called my home owner's insurance policy and increased my amount.

Guest's picture

The author is making a hidden assumption here, that is an assumption nonetheless: that wanting world peace or ending hunger is wanting the impossible. That's not scientifically proven. The only way to create the future reality that are hearts want so badly is to believe that ending war and ending hunger are not only possible, but the most important dream to keep alive.

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Just to comment on number 2,, ^^ An existential crisis or angst would never the problem for a true muslim regardless of age because we have definite clear about our existence itself :)))))

does money solve problems

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Classic white Piggy Bank

So many Americans are trapped in debt and underfunded for retirement that one has to ask, “What is going on? Why are so many of us in such financial trouble?”

A lot of it isn’t our fault and is beyond our control, but we do need to get to the root of the money problems that we can control. So, it’s important to understand the causes of financial problems. What are they and how do they manifest? More importantly, how can we solve them?

Let’s figure it out.

Financial Illiteracy 

Financial literacy is gravely lacking in our society, and it’s causing big trouble in our financial lives.

“Remaining in the dark about certain financial factors will eventually lead you to be more exposed to countless financial problems,” said Clint Proctor, editor-in-chief of Investor Junkie . 

It may not be your fault that you lack financial literacy, but it is your responsibility to resolve it. You might want to hire a financial advisor for intensive one-on-one help, but you can also check out a growing list of books and podcasts to learn more.

Having a Negative Mindset 

Seeing the world through rose-colored glasses won’t solely guide you to financial success, but the reverse mindset can outright hurt you.

“Behind a lot of common financial issues is a disabling money mindset,” said Kelley Holland , a financial empowerment coach. “This can manifest as negative self-talk, like, ‘I’m hopeless with money’ or ‘I’ll never be able to retire.’ It can also show up as avoidance: Not opening bills that arrive, failing to track spending, or missing payment deadlines.”

There are a few ways to tackle a negative money mindset including to challenge your beliefs and recognize your own strengths and past achievements.

“Consider whether your belief is accurate — or whether you really have strengths or experiences you can draw on to take charge of your finances,” Holland said. “For example, if you have had success adopting a fitness regimen, you can think about the reminders and motivators you drew on to make that happen.”

Getting Bad Advice From So-Called ‘Experts’

“Our current marketing landscape makes it hard for people to get trustworthy financial help,” said Josh Richner, marketing coordinator for National Legal Center . “Advertising platforms create new ways to target populations with aggressive ads, but the information isn’t always transparent or accurate. The more profitable the service is, the more the companies can afford to market it. That’s a catch-22 when we’re working with people who are struggling.”

To remedy this problem, Richner recommends that before making any major financial decision, you consult a non-profit credit counseling agency, a law firm familiar with ways to avoid bankruptcy and/or a credible financial advisor. 

“The key is to get multiple perspectives so you can make an informed decision that’s best for your unique financial situation,” Richner said.

Funding Your Grown Kids’ Lives 

“Helicopter parents [and] demanding children have created a generation of offspring that are not financially independent from their parents,” said Kathleen Owens, financial advisor at Aurora Financial Planning . “This is a very large societal problem.” 

To solve this problem in your own life, put your generosity in check and set boundaries with your kids to end the vicious cycle .

“I have seen plenty of people in financial hot water over the years, and I have seen a variety of different root causes for their problems, but by far the most common root cause of financial problems in my experience is addiction,” said Ziga Breznik, owner and head of research at Public Finance International .

“Of course, drug addiction and gambling are amongst the most financially crippling, but it equally applies to alcohol and even things like smoking. You’d be surprised by how much debt a chain smoker can rack up when they’re on 40 a day. I’ve dealt with people who were spending $15,000 plus a year on cigarettes, and the worse thing was they were so addicted that they didn’t even realize just how much money they were sending up in smoke.”

The solution to this problem? Seek help to quit!

“A very common problem is when people are afraid to face their finances,” said Alex Caswell, a wealth planner at RHS Financial . “This causes issues such as under-saving, running into debt, missing investment opportunities and having an overall unhealthy and stressful relationship with money. They choose to not look at their bank statements, choose not to evaluate how much they are spending, and avoid making important decisions on their money due to fear of what they will find out.”

Dissolve your fear by taking baby steps to handle your financial life.

“Simple things such as reviewing your bank statement once a month can lead to budgeting,” Caswell said. “Start small and focus on building a good habit, then go bigger. Don’t be hard on yourself in the process. Understand that it won’t work right away, but with enough time and focus it will get better.”

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HBR On Leadership podcast series

Do You Understand the Problem You’re Trying to Solve?

To solve tough problems at work, first ask these questions.

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Problem solving skills are invaluable in any job. But all too often, we jump to find solutions to a problem without taking time to really understand the dilemma we face, according to Thomas Wedell-Wedellsborg , an expert in innovation and the author of the book, What’s Your Problem?: To Solve Your Toughest Problems, Change the Problems You Solve .

In this episode, you’ll learn how to reframe tough problems by asking questions that reveal all the factors and assumptions that contribute to the situation. You’ll also learn why searching for just one root cause can be misleading.

Key episode topics include: leadership, decision making and problem solving, power and influence, business management.

HBR On Leadership curates the best case studies and conversations with the world’s top business and management experts, to help you unlock the best in those around you. New episodes every week.

  • Listen to the original HBR IdeaCast episode: The Secret to Better Problem Solving (2016)
  • Find more episodes of HBR IdeaCast
  • Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR on Leadership , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock the best in those around you.

Problem solving skills are invaluable in any job. But even the most experienced among us can fall into the trap of solving the wrong problem.

Thomas Wedell-Wedellsborg says that all too often, we jump to find solutions to a problem – without taking time to really understand what we’re facing.

He’s an expert in innovation, and he’s the author of the book, What’s Your Problem?: To Solve Your Toughest Problems, Change the Problems You Solve .

  In this episode, you’ll learn how to reframe tough problems, by asking questions that reveal all the factors and assumptions that contribute to the situation. You’ll also learn why searching for one root cause can be misleading. And you’ll learn how to use experimentation and rapid prototyping as problem-solving tools.

This episode originally aired on HBR IdeaCast in December 2016. Here it is.

SARAH GREEN CARMICHAEL: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green Carmichael.

Problem solving is popular. People put it on their resumes. Managers believe they excel at it. Companies count it as a key proficiency. We solve customers’ problems.

The problem is we often solve the wrong problems. Albert Einstein and Peter Drucker alike have discussed the difficulty of effective diagnosis. There are great frameworks for getting teams to attack true problems, but they’re often hard to do daily and on the fly. That’s where our guest comes in.

Thomas Wedell-Wedellsborg is a consultant who helps companies and managers reframe their problems so they can come up with an effective solution faster. He asks the question “Are You Solving The Right Problems?” in the January-February 2017 issue of Harvard Business Review. Thomas, thank you so much for coming on the HBR IdeaCast .

THOMAS WEDELL-WEDELLSBORG: Thanks for inviting me.

SARAH GREEN CARMICHAEL: So, I thought maybe we could start by talking about the problem of talking about problem reframing. What is that exactly?

THOMAS WEDELL-WEDELLSBORG: Basically, when people face a problem, they tend to jump into solution mode to rapidly, and very often that means that they don’t really understand, necessarily, the problem they’re trying to solve. And so, reframing is really a– at heart, it’s a method that helps you avoid that by taking a second to go in and ask two questions, basically saying, first of all, wait. What is the problem we’re trying to solve? And then crucially asking, is there a different way to think about what the problem actually is?

SARAH GREEN CARMICHAEL: So, I feel like so often when this comes up in meetings, you know, someone says that, and maybe they throw out the Einstein quote about you spend an hour of problem solving, you spend 55 minutes to find the problem. And then everyone else in the room kind of gets irritated. So, maybe just give us an example of maybe how this would work in practice in a way that would not, sort of, set people’s teeth on edge, like oh, here Sarah goes again, reframing the whole problem instead of just solving it.

THOMAS WEDELL-WEDELLSBORG: I mean, you’re bringing up something that’s, I think is crucial, which is to create legitimacy for the method. So, one of the reasons why I put out the article is to give people a tool to say actually, this thing is still important, and we need to do it. But I think the really critical thing in order to make this work in a meeting is actually to learn how to do it fast, because if you have the idea that you need to spend 30 minutes in a meeting delving deeply into the problem, I mean, that’s going to be uphill for most problems. So, the critical thing here is really to try to make it a practice you can implement very, very rapidly.

There’s an example that I would suggest memorizing. This is the example that I use to explain very rapidly what it is. And it’s basically, I call it the slow elevator problem. You imagine that you are the owner of an office building, and that your tenants are complaining that the elevator’s slow.

Now, if you take that problem framing for granted, you’re going to start thinking creatively around how do we make the elevator faster. Do we install a new motor? Do we have to buy a new lift somewhere?

The thing is, though, if you ask people who actually work with facilities management, well, they’re going to have a different solution for you, which is put up a mirror next to the elevator. That’s what happens is, of course, that people go oh, I’m busy. I’m busy. I’m– oh, a mirror. Oh, that’s beautiful.

And then they forget time. What’s interesting about that example is that the idea with a mirror is actually a solution to a different problem than the one you first proposed. And so, the whole idea here is once you get good at using reframing, you can quickly identify other aspects of the problem that might be much better to try to solve than the original one you found. It’s not necessarily that the first one is wrong. It’s just that there might be better problems out there to attack that we can, means we can do things much faster, cheaper, or better.

SARAH GREEN CARMICHAEL: So, in that example, I can understand how A, it’s probably expensive to make the elevator faster, so it’s much cheaper just to put up a mirror. And B, maybe the real problem people are actually feeling, even though they’re not articulating it right, is like, I hate waiting for the elevator. But if you let them sort of fix their hair or check their teeth, they’re suddenly distracted and don’t notice.

But if you have, this is sort of a pedestrian example, but say you have a roommate or a spouse who doesn’t clean up the kitchen. Facing that problem and not having your elegant solution already there to highlight the contrast between the perceived problem and the real problem, how would you take a problem like that and attack it using this method so that you can see what some of the other options might be?

THOMAS WEDELL-WEDELLSBORG: Right. So, I mean, let’s say it’s you who have that problem. I would go in and say, first of all, what would you say the problem is? Like, if you were to describe your view of the problem, what would that be?

SARAH GREEN CARMICHAEL: I hate cleaning the kitchen, and I want someone else to clean it up.

THOMAS WEDELL-WEDELLSBORG: OK. So, my first observation, you know, that somebody else might not necessarily be your spouse. So, already there, there’s an inbuilt assumption in your question around oh, it has to be my husband who does the cleaning. So, it might actually be worth, already there to say, is that really the only problem you have? That you hate cleaning the kitchen, and you want to avoid it? Or might there be something around, as well, getting a better relationship in terms of how you solve problems in general or establishing a better way to handle small problems when dealing with your spouse?

SARAH GREEN CARMICHAEL: Or maybe, now that I’m thinking that, maybe the problem is that you just can’t find the stuff in the kitchen when you need to find it.

THOMAS WEDELL-WEDELLSBORG: Right, and so that’s an example of a reframing, that actually why is it a problem that the kitchen is not clean? Is it only because you hate the act of cleaning, or does it actually mean that it just takes you a lot longer and gets a lot messier to actually use the kitchen, which is a different problem. The way you describe this problem now, is there anything that’s missing from that description?

SARAH GREEN CARMICHAEL: That is a really good question.

THOMAS WEDELL-WEDELLSBORG: Other, basically asking other factors that we are not talking about right now, and I say those because people tend to, when given a problem, they tend to delve deeper into the detail. What often is missing is actually an element outside of the initial description of the problem that might be really relevant to what’s going on. Like, why does the kitchen get messy in the first place? Is it something about the way you use it or your cooking habits? Is it because the neighbor’s kids, kind of, use it all the time?

There might, very often, there might be issues that you’re not really thinking about when you first describe the problem that actually has a big effect on it.

SARAH GREEN CARMICHAEL: I think at this point it would be helpful to maybe get another business example, and I’m wondering if you could tell us the story of the dog adoption problem.

THOMAS WEDELL-WEDELLSBORG: Yeah. This is a big problem in the US. If you work in the shelter industry, basically because dogs are so popular, more than 3 million dogs every year enter a shelter, and currently only about half of those actually find a new home and get adopted. And so, this is a problem that has persisted. It’s been, like, a structural problem for decades in this space. In the last three years, where people found new ways to address it.

So a woman called Lori Weise who runs a rescue organization in South LA, and she actually went in and challenged the very idea of what we were trying to do. She said, no, no. The problem we’re trying to solve is not about how to get more people to adopt dogs. It is about keeping the dogs with their first family so they never enter the shelter system in the first place.

In 2013, she started what’s called a Shelter Intervention Program that basically works like this. If a family comes and wants to hand over their dog, these are called owner surrenders. It’s about 30% of all dogs that come into a shelter. All they would do is go up and ask, if you could, would you like to keep your animal? And if they said yes, they would try to fix whatever helped them fix the problem, but that made them turn over this.

And sometimes that might be that they moved into a new building. The landlord required a deposit, and they simply didn’t have the money to put down a deposit. Or the dog might need a $10 rabies shot, but they didn’t know how to get access to a vet.

And so, by instigating that program, just in the first year, she took her, basically the amount of dollars they spent per animal they helped went from something like $85 down to around $60. Just an immediate impact, and her program now is being rolled out, is being supported by the ASPCA, which is one of the big animal welfare stations, and it’s being rolled out to various other places.

And I think what really struck me with that example was this was not dependent on having the internet. This was not, oh, we needed to have everybody mobile before we could come up with this. This, conceivably, we could have done 20 years ago. Only, it only happened when somebody, like in this case Lori, went in and actually rethought what the problem they were trying to solve was in the first place.

SARAH GREEN CARMICHAEL: So, what I also think is so interesting about that example is that when you talk about it, it doesn’t sound like the kind of thing that would have been thought of through other kinds of problem solving methods. There wasn’t necessarily an After Action Review or a 5 Whys exercise or a Six Sigma type intervention. I don’t want to throw those other methods under the bus, but how can you get such powerful results with such a very simple way of thinking about something?

THOMAS WEDELL-WEDELLSBORG: That was something that struck me as well. This, in a way, reframing and the idea of the problem diagnosis is important is something we’ve known for a long, long time. And we’ve actually have built some tools to help out. If you worked with us professionally, you are familiar with, like, Six Sigma, TRIZ, and so on. You mentioned 5 Whys. A root cause analysis is another one that a lot of people are familiar with.

Those are our good tools, and they’re definitely better than nothing. But what I notice when I work with the companies applying those was those tools tend to make you dig deeper into the first understanding of the problem we have. If it’s the elevator example, people start asking, well, is that the cable strength, or is the capacity of the elevator? That they kind of get caught by the details.

That, in a way, is a bad way to work on problems because it really assumes that there’s like a, you can almost hear it, a root cause. That you have to dig down and find the one true problem, and everything else was just symptoms. That’s a bad way to think about problems because problems tend to be multicausal.

There tend to be lots of causes or levers you can potentially press to address a problem. And if you think there’s only one, if that’s the right problem, that’s actually a dangerous way. And so I think that’s why, that this is a method I’ve worked with over the last five years, trying to basically refine how to make people better at this, and the key tends to be this thing about shifting out and saying, is there a totally different way of thinking about the problem versus getting too caught up in the mechanistic details of what happens.

SARAH GREEN CARMICHAEL: What about experimentation? Because that’s another method that’s become really popular with the rise of Lean Startup and lots of other innovation methodologies. Why wouldn’t it have worked to, say, experiment with many different types of fixing the dog adoption problem, and then just pick the one that works the best?

THOMAS WEDELL-WEDELLSBORG: You could say in the dog space, that’s what’s been going on. I mean, there is, in this industry and a lot of, it’s largely volunteer driven. People have experimented, and they found different ways of trying to cope. And that has definitely made the problem better. So, I wouldn’t say that experimentation is bad, quite the contrary. Rapid prototyping, quickly putting something out into the world and learning from it, that’s a fantastic way to learn more and to move forward.

My point is, though, that I feel we’ve come to rely too much on that. There’s like, if you look at the start up space, the wisdom is now just to put something quickly into the market, and then if it doesn’t work, pivot and just do more stuff. What reframing really is, I think of it as the cognitive counterpoint to prototyping. So, this is really a way of seeing very quickly, like not just working on the solution, but also working on our understanding of the problem and trying to see is there a different way to think about that.

If you only stick with experimentation, again, you tend to sometimes stay too much in the same space trying minute variations of something instead of taking a step back and saying, wait a minute. What is this telling us about what the real issue is?

SARAH GREEN CARMICHAEL: So, to go back to something that we touched on earlier, when we were talking about the completely hypothetical example of a spouse who does not clean the kitchen–

THOMAS WEDELL-WEDELLSBORG: Completely, completely hypothetical.

SARAH GREEN CARMICHAEL: Yes. For the record, my husband is a great kitchen cleaner.

You started asking me some questions that I could see immediately were helping me rethink that problem. Is that kind of the key, just having a checklist of questions to ask yourself? How do you really start to put this into practice?

THOMAS WEDELL-WEDELLSBORG: I think there are two steps in that. The first one is just to make yourself better at the method. Yes, you should kind of work with a checklist. In the article, I kind of outlined seven practices that you can use to do this.

But importantly, I would say you have to consider that as, basically, a set of training wheels. I think there’s a big, big danger in getting caught in a checklist. This is something I work with.

My co-author Paddy Miller, it’s one of his insights. That if you start giving people a checklist for things like this, they start following it. And that’s actually a problem, because what you really want them to do is start challenging their thinking.

So the way to handle this is to get some practice using it. Do use the checklist initially, but then try to step away from it and try to see if you can organically make– it’s almost a habit of mind. When you run into a colleague in the hallway and she has a problem and you have five minutes, like, delving in and just starting asking some of those questions and using your intuition to say, wait, how is she talking about this problem? And is there a question or two I can ask her about the problem that can help her rethink it?

SARAH GREEN CARMICHAEL: Well, that is also just a very different approach, because I think in that situation, most of us can’t go 30 seconds without jumping in and offering solutions.

THOMAS WEDELL-WEDELLSBORG: Very true. The drive toward solutions is very strong. And to be clear, I mean, there’s nothing wrong with that if the solutions work. So, many problems are just solved by oh, you know, oh, here’s the way to do that. Great.

But this is really a powerful method for those problems where either it’s something we’ve been banging our heads against tons of times without making progress, or when you need to come up with a really creative solution. When you’re facing a competitor with a much bigger budget, and you know, if you solve the same problem later, you’re not going to win. So, that basic idea of taking that approach to problems can often help you move forward in a different way than just like, oh, I have a solution.

I would say there’s also, there’s some interesting psychological stuff going on, right? Where you may have tried this, but if somebody tries to serve up a solution to a problem I have, I’m often resistant towards them. Kind if like, no, no, no, no, no, no. That solution is not going to work in my world. Whereas if you get them to discuss and analyze what the problem really is, you might actually dig something up.

Let’s go back to the kitchen example. One powerful question is just to say, what’s your own part in creating this problem? It’s very often, like, people, they describe problems as if it’s something that’s inflicted upon them from the external world, and they are innocent bystanders in that.

SARAH GREEN CARMICHAEL: Right, or crazy customers with unreasonable demands.

THOMAS WEDELL-WEDELLSBORG: Exactly, right. I don’t think I’ve ever met an agency or consultancy that didn’t, like, gossip about their customers. Oh, my god, they’re horrible. That, you know, classic thing, why don’t they want to take more risk? Well, risk is bad.

It’s their business that’s on the line, not the consultancy’s, right? So, absolutely, that’s one of the things when you step into a different mindset and kind of, wait. Oh yeah, maybe I actually am part of creating this problem in a sense, as well. That tends to open some new doors for you to move forward, in a way, with stuff that you may have been struggling with for years.

SARAH GREEN CARMICHAEL: So, we’ve surfaced a couple of questions that are useful. I’m curious to know, what are some of the other questions that you find yourself asking in these situations, given that you have made this sort of mental habit that you do? What are the questions that people seem to find really useful?

THOMAS WEDELL-WEDELLSBORG: One easy one is just to ask if there are any positive exceptions to the problem. So, was there day where your kitchen was actually spotlessly clean? And then asking, what was different about that day? Like, what happened there that didn’t happen the other days? That can very often point people towards a factor that they hadn’t considered previously.

SARAH GREEN CARMICHAEL: We got take-out.

THOMAS WEDELL-WEDELLSBORG: S,o that is your solution. Take-out from [INAUDIBLE]. That might have other problems.

Another good question, and this is a little bit more high level. It’s actually more making an observation about labeling how that person thinks about the problem. And what I mean with that is, we have problem categories in our head. So, if I say, let’s say that you describe a problem to me and say, well, we have a really great product and are, it’s much better than our previous product, but people aren’t buying it. I think we need to put more marketing dollars into this.

Now you can go in and say, that’s interesting. This sounds like you’re thinking of this as a communications problem. Is there a different way of thinking about that? Because you can almost tell how, when the second you say communications, there are some ideas about how do you solve a communications problem. Typically with more communication.

And what you might do is go in and suggest, well, have you considered that it might be, say, an incentive problem? Are there incentives on behalf of the purchasing manager at your clients that are obstructing you? Might there be incentive issues with your own sales force that makes them want to sell the old product instead of the new one?

So literally, just identifying what type of problem does this person think about, and is there different potential way of thinking about it? Might it be an emotional problem, a timing problem, an expectations management problem? Thinking about what label of what type of problem that person is kind of thinking as it of.

SARAH GREEN CARMICHAEL: That’s really interesting, too, because I think so many of us get requests for advice that we’re really not qualified to give. So, maybe the next time that happens, instead of muddying my way through, I will just ask some of those questions that we talked about instead.

THOMAS WEDELL-WEDELLSBORG: That sounds like a good idea.

SARAH GREEN CARMICHAEL: So, Thomas, this has really helped me reframe the way I think about a couple of problems in my own life, and I’m just wondering. I know you do this professionally, but is there a problem in your life that thinking this way has helped you solve?

THOMAS WEDELL-WEDELLSBORG: I’ve, of course, I’ve been swallowing my own medicine on this, too, and I think I have, well, maybe two different examples, and in one case somebody else did the reframing for me. But in one case, when I was younger, I often kind of struggled a little bit. I mean, this is my teenage years, kind of hanging out with my parents. I thought they were pretty annoying people. That’s not really fair, because they’re quite wonderful, but that’s what life is when you’re a teenager.

And one of the things that struck me, suddenly, and this was kind of the positive exception was, there was actually an evening where we really had a good time, and there wasn’t a conflict. And the core thing was, I wasn’t just seeing them in their old house where I grew up. It was, actually, we were at a restaurant. And it suddenly struck me that so much of the sometimes, kind of, a little bit, you love them but they’re annoying kind of dynamic, is tied to the place, is tied to the setting you are in.

And of course, if– you know, I live abroad now, if I visit my parents and I stay in my old bedroom, you know, my mother comes in and wants to wake me up in the morning. Stuff like that, right? And it just struck me so, so clearly that it’s– when I change this setting, if I go out and have dinner with them at a different place, that the dynamic, just that dynamic disappears.

SARAH GREEN CARMICHAEL: Well, Thomas, this has been really, really helpful. Thank you for talking with me today.

THOMAS WEDELL-WEDELLSBORG: Thank you, Sarah.  

HANNAH BATES: That was Thomas Wedell-Wedellsborg in conversation with Sarah Green Carmichael on the HBR IdeaCast. He’s an expert in problem solving and innovation, and he’s the author of the book, What’s Your Problem?: To Solve Your Toughest Problems, Change the Problems You Solve .

We’ll be back next Wednesday with another hand-picked conversation about leadership from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review.

We’re a production of Harvard Business Review. If you want more podcasts, articles, case studies, books, and videos like this, find it all at HBR dot org.

This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Music by Coma Media. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener.

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Can Donald Trump's Truth Social deal save him from his financial woes? Maybe.

does money solve problems

WASHINGTON – Former President Donald Trump is facing money challenges as he contends with legal fights on multiple fronts while trying to raise cash for his bid to reclaim the White House.

In a civil fraud case, Trump has been ordered to pay a half-billion dollar bond which his lawyers have called a “practical impossibility.” And in the 2024 presidential campaign, President Joe Biden has been lapping him in fundraising.

But a deal to take his social media platform, Truth Social , and its parent company public could provide the former president and business magnate a critical lifeline and could more than double his net worth and net him more than $3 billion.

The deal isn’t set in stone yet and Trump still has a few hurdles to clear if he wants immediate access to his newfound wealth. Here’s what to know about Trump’s social media deal and his financial woes.

What is Truth Social?

Truth Social is Trump's social media platform he launched after the 2020 election. The app is similar to X, formerly Twitter, and is Trump's favored messaging tool after his X account was permanently suspended for his false claims of election fraud. His account has since been reinstated after Elon Musk took control of the platform, but Trump has stayed on Truth Social.

Prep for the polls: See who is running for president and compare where they stand on key issues in our Voter Guide

The app is marketed as an alternative social media platform for conservatives. Trump said in a statement he started the platform to "stand up to the tyranny of Big Tech."

What is the Truth Social merger?

Investors on Friday green lighted a merger with Trump’s media and technology company, aptly named Trump Media & Technology Group. The company, which owns Truth Social, will merge with Digital World Acquisition Corp, an SPAC – companies aimed at raising cash and merging with other entities.

If all goes well with the agreement, Truth Social can start trading on Monday labeled DJT – Trump’s initials .

Trump’s stake in Truth Social’s parent company values over $3 billion but a prior agreement bars Trump from selling any of his shares or borrowing cash against them for six months. If the agreement sticks, Trump's financial problems won't be going away anytime soon.

What are Trump’s financial problems?

Trump’s most immediate problem is a nearly half billion dollar bond he is ordered to post by Monday.  

Last month a New York judge ruled in a civil fraud case that the former president inflated the values of his properties and delivered a penalty of almost $454 million. Trump is seeking to appeal the ruling and must put up a bond equal to the penalty. His lawyers however, told an appeals court it was a “practical impossibility” to put up the bond. 

“Despite scouring the market, we have been unsuccessful in our effort to obtain a bond for the Judgment Amount for Defendants for the simple reason that obtaining an appeal bond for $464 million is a practical impossibility under the circumstances presented,” his lawyers said in a court filing.

If Trump can’t post the bond by Monday, New York Attorney General Letitia James can begin collecting the penalty from last month’s case. If Trump can’t pay up, James could begin seizing his assets.

Trump's fundraising numbers

Trump is also significantly trailing Biden in campaign fundraising as he runs for a second term while he is mired in legal trouble.

Biden raised $21.3 million in February, nearly double what Trump raised the same month – $10.9 million – according to filings with the Federal Election Commission.

Not only that, Biden’s campaign has $71 million cash on hand compared to Trump’s campaign which falls behind at $33.5 million.

Can the Truth Social deal save Trump?

Trump could ask the company Truth Social is merging with to waive the six-month waiting period – called a “lock-up” provision – before he could turn his stake into cash but that has its own set of complications. 

But waiving the requirement could lower the company’s value and might not even allow Trump to tap into all of his shares as he could be limited to how much stock he can sell.

With the Monday deadline quickly approaching, it’s still unclear how Trump will be able to post up the $464 million bond. In the meantime, Trump’s lawyers are attempting to either reduce the bond requirement or completely waive it.

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Funding pulled for cure violence, a program that was supposed to help solve jacksonville’s crime problem.

Jim Piggott , Reporter

JACKSONVILLE, Fla. – A program that was supposed to be the answer to solving Jacksonville’s crime problem is no more.

Cure Violence, a program that was designed to go to people on the street and bring solutions to conflicts before they led to violence, has been defunded after more than four years of work, millions in investments and mixed reviews.

RELATED: Cure Violence asks for funding increase, city wants to see data

When Jacksonville began the program nearly five years ago, crime was increasing. The city contracted and paid millions to Cure Violence Global to train mentors, or “street counselors,” to work with youth, gangs and others to try to resolve differences.

At first, it seemed to make a difference . It was eventually expanded to three areas of Jacksonville: the Westside, Northside and Eastside.

MORE: Mayor Curry wants to expand Cure Violence program to other neighborhoods

But then the program fizzled out.

Funding has been increasing over the years — reaching $3.5 million last year — with parts divided between several groups running the program locally, like Potters House on the Westside and Noah’s Ark In east Jacksonville. But in the last budget, Cure Violence was only extended for a few months, and now its time in Jacksonville is over.

Noah’s Ark, a community group that aimed to address violence and homelessness, received some of that grant money to help run the program in Jacksonville. Nobody was there on Monday and News4JAX tried reaching the people who ran the program, but they didn’t respond.

Henry Stokes has been very vocal about the groups and churches that run these social programs and get millions to help, but he said that money never makes its way to the streets.

“It’s not nobody following up on the program, so when they get the money, to make sure they put the money in the right spot. So, now when they get this grant money they need to have a follow-up that makes sure that the people doing the right thing with the money,” Stokes said.

News4JAX did reach someone who ran the program for Potter’s House. They said they were told not to comment and the program was turned over to the city.

Charles Griggs, who is the Director of Community Initiatives for the mayor’s office, said the city is now looking at a long-term strategy to fight crime and that could involve violence intervention similar to the strategy used by Cure Violence.

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How does money overcome the problems of the barter system?

Table of Contents

  • 1 How does money overcome the problems of the barter system?
  • 2 Why did the use of money replace the barter system?
  • 3 How does money solve the problem of coincidence of wants explain with example?
  • 4 How does money solve the double coincidence of wants problem that arises in a barter system?
  • 5 How does money solve the problem of double coincidence of wants explain with an example of your own Brainly?
  • 6 How does money solve the problem of?
  • 7 What is the difference between Barter and money?
  • 8 Why is money accepted as a medium of exchange?

Money overcomes the problem of barter system by replacing the C-C economy with monetary economy (where ‘C stands for commodity). When there was no money, it was difficult to give common unit of value to goods or commodities, but when money was evolved, it gave a common unit of value to every goods and services.

How is money an improvement on barter?

Money is far more flexible and convenient. The main advantage of money over barter is that money is always going to be usable. Barter is very often not possible. This is because of the need for what is called a “coincidence of wants” (sometimes called a “double coincidence of wants”).

Why did the use of money replace the barter system?

Why did money replace the barter system? With the gold standard, the money supply would be tied to the amount of gold the country possessed, and a restricted money supply could impede economic growth. People were afraid to use currency like greenbacks, forcing the creations of new types of currency to be created.

How does money overcome the problems of barter system Explain briefly Class 12?

Money overcomes the shortcomings of barter system in the following manner: i. Money solves the problem of double coincidence of wants. For example, if a person needs wheat in exchange of tea, then he/she must search for a person who is ready to trade wheat for tea. Money made the need for such searches redundant.

How does money solve the problem of coincidence of wants explain with example?

How does money solve the problem of double coincidence of wants? A person holding money can easily exchange it for any commodity or service that he or she might want. For example: It is no longer necessary for the shoemaker to look for a farmer who will buy this shoes and at the same time sell him rice.

How does money solve the problem of double coincidence of wants?

Explanation: Answer: Money solves the problem of double coincidence of wants by acting as a medium of exchange. Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy.

How does money solve the double coincidence of wants problem that arises in a barter system?

Money has solved the problem by working as a medium of exchange. The seller can sell the goods in the market in return for money and buy the goods he wants to buy in return for the money. Detailed Answer: Double coincidence of wants means that goods in possession of two different individuals are needed by each other.

How does the use of money make it easier to exchange things how does money solve the problem of double coincidence of wants explain with an example of your own?

How does money solve the problem of double coincidence of wants explain with an example of your own Brainly?

Explain with an example of your own. Money acts an medium of exchange and eliminates the factor double coincidence of wants . It solves the double co incidence of wants by acting as a medium of exchange. For example, a potter, wants to sells his pots in the market and wants to buy sugar.

How does money solve the problem of double coincidence of wants Byjus?

Money eliminates the need for double coincidence of wants. Money provides the important intermediate step, in an economy where money is in use, thereby helping to remove the double coincidence of wants. Here money is called the medium of exchange because in the medium of exchange, money acts as an intermediate.

How does money solve the problem of?

Answer: Money solves the problem of double coincidence of wants by acting as a medium of exchange. Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy.

How does money solve the problem of barter system?

Money overcomes the problem of barter system by replacing the C-C economy with monetary economy (where ‘C stands for commodity). (i) Money as medium exchange solves problem of lack of double coincidence.

What is the difference between Barter and money?

Under barter, people had to face problem of tranporting their goods from one place to another to get them exchanged. Money has solved this problem. A person may sell his product at one place for money and use the same to buy another product at some other place by using same money.

What problems does money solve in economics?

(i) Money as medium exchange solves problem of lack of double coincidence. (ii) Money as measure of value solves problem of absence of common measure. (iii) Money as store of value solves problem of storing wealth. (iv) Money as standard of deferred payment solves difficulty of borrowing and lending.

Why is money accepted as a medium of exchange?

Money is accepted as medium of exchange. People exchange goods and services through medium of money when they buy goods or sell products. Thus money acts as intermediary which solves barter’s problem of lack of double coincidence of wants.

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Israel’s Deadly Airstrike on the World Central Kitchen

The story behind the pioneering aid group and how it mistakenly came under attack..

Hosted by Michael Barbaro

Featuring Kim Severson and Adam Rasgon

Produced by Lynsea Garrison ,  Olivia Natt ,  Carlos Prieto and Asthaa Chaturvedi

Edited by Marc Georges

Original music by Dan Powell and Marion Lozano

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The Israeli airstrike that killed seven workers delivering food in Gaza has touched off global outrage and condemnation.

Kim Severson, who covers food culture for The Times, discusses the World Central Kitchen, the aid group at the center of the story; and Adam Rasgon, who reports from Israel, explains what we know about the tragedy so far.

On today’s episode

Kim Severson , a food correspondent for The New York Times.

Adam Rasgon , an Israel correspondent for The New York Times.

A white van is stopped by the side of the road with both doors open. A hole is pierced through the roof.

Background reading

The relief convoy was hit just after workers had delivered tons of food .

José Andrés, the Spanish chef who founded World Central Kitchen, and his corps of cooks have become leaders in disaster aid .

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  27. Israel's Deadly Airstrike on the World Central Kitchen

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