3 Reasons People Struggle with Money

The 3 Reasons People Struggle with Money and Finances

“If you think education is expensive, try ignorance.” -Derek Bok

From what I can tell, there are three basic reasons why people struggle financially. Individually, each one of these reasons can seriously impact your financial well-­being in a negative way. Should you experience all three at once, however, it will likely equate to a financial catastrophe in your life. 

In this post, you’ll find the 3 reasons people struggle with money and finances, as well as what you can do to avoid these issues.

1. Lack of financial knowledge causes people to struggle with money

Consider first the issue of financial knowledge, or lack thereof. The most effective form of financial education begins at home. This is why lack of financial knowledge is number one on my list of reasons people struggle financially. Think back to your childhood. Did your mom and dad sit down with you and demonstrate how to balance a checkbook, or take time to explain how interest works on a credit card or mortgage payment? A lucky few of you will answer “yes”, but most of us are victims of financial ignorance being passed on from generation to generation. Our parents’ generation is barely managing to keep their own heads above water when it comes to money, let alone show the next generation how to be financially responsible and wise. As a result, too many of us feel overwhelmed by the idea of planning for retirement.  We stress making decisions around choosing the right retirement savings option, or choosing to find an alternate investment strategy.

The way I see it, the story of money and finance is told in the language of numbers.  We learn to speak this language from our parents, grandparents, and school teachers. The source of our financial woes is two-­‐‑fold: 1) fault lies with those responsible for setting good examples, but more importantly, 2) fault lies in us for either not paying attention or in simply showing a lack of initiative to self-­‐‑educate. Regardless of who you are or how you were raised you must have come in contact with someone, somewhere that could have helped get you further along than where you are now. The bottom line is this -­‐‑ we have to know numbers in order to clearly comprehend the impact that our daily decisions have on our financial well-­‐‑being.

Money is mathematics. For example, when I hand a teen-­‐‑aged employee at the local ice cream shop $1.04 in order to pay for my $.49 cone, I should not have a pair of glazed eyes looking over the counter at me unable to comprehend the premise that I want two quarters and a nickel back.  And yet that’s exactly what happens.  Valuable time is wasted as I watch America’s youth scramble for a calculator.  And what if you ask the average sixteen year old boy if the car he wants is an asset or is it a liability? I’m sure you can imagine the sort of clueless expression you would be met with.

Now, let’s get personal about your financial knowledge for a minute. Do you know the rules which govern your earned income? Should you invest your hard-­‐‑earned cash in the stock market or find another alternative? How do you tell a good investment opportunity from a bad one?  Can you tell me in absolute certain terms the definition of an asset?  Wouldn’t you know it, the answer to all of these questions hides behind numbers, which is the reason for my assertion why a person’s fluency around mathematics makes or breaks the bank.

On my Cash Flow Freedom University page, you can get some great material for free to boost your knowledge, including an ebook and 3 part audio series. 

2. Fear causes people to struggle with money

Number two on my list is fear.  Money and wealth (or lack thereof) is an extremely emotionally charged subject.  There are a million different aspects of money and finance that scare people. The most obvious  “fear” is not having enough, but in my opinion this fear is usually a side effect of the up-­‐‑bringing.  Childhood memories of household panic when bills arrived in the mail, or images of empty cupboards and second-­‐‑hand clothes leave feelings of fear and inferiority associated with lack of money. The mounting tension from these circumstances is very difficult for children to rationalize. As is the nature of a child, what they don’t understand they do feel.  The sensation of fear is absorbed by the child and carried into adulthood.  I’ve often heard people justify their financial hardships by rationalizing that their grandparents struggled, then their parents, so now they struggle; a generational curse, so to speak. Many people are so used the symptoms of struggling that the idea of financial freedom never really occurs to them. This is why there is such an epidemic of people who spend their time complaining about money and how “expensive” everything is but who spend little or no time investigating ways to earn more money and better manage the little funds they have. It seems like people are brainwashed into believing that they are destined to struggle and therefore should not even attempt to strive for more.

What I mean to impress upon you is how a person’s fear of their inability to earn or manage money can become the cause of failure. The problem then becomes of a circular nature, what comes first – the chicken or the egg, if you may. The failure causes the fear of failure, which causes further failure. But since nobody likes to feel like a failure, we come up with all kinds of excuses like “I’m just out of my league,” I’m not smart enough” I’m not liked enough”, or my personal favorite, “I don’t have enough time.” Know this: Your financial success may hinge on your ability to overcome a major fear of failure.  You are advised to identify your fears by whatever means necessary, and then to face them. Everyone is afraid, but not everyone is paralyzed into inaction by it. The defining distinction between success and mediocrity is having the courage to act in spite of uncertainty and the fear that comes with it.

“Courage is not the lack of fear. It is acting in spite of it.” -Mark Twain

3. Entitlement mentality causes people to struggle financially

This brings me to the third item on the list -­‐‑ entitlement.  Entitlement mentality for the “bling-­‐‑bling” life style has taken over the entire USA, so it seems. Entitlement drives people to living outside of their means. Every time I pull up to a stop-­‐‑light in my beat-­‐‑up ten year old Honda Civic, I am certain to see a late model high-­‐‑end luxury car or SUV next to me. Those things can easily cost between forty and sixty thousand dollars, or more. I can literally buy several houses for that kind of money. Before I knew anything about money (except for how to spend it), I incorrectly assumed that the owners of these fancy cars were high income earners. I know better now.  Chances are, the driver of that Lexus parked next to you borrowed $50,000 from a bank at a payment of $900 per month for the privilege of looking fly. I remember reading in one of Dave Ramsey’s books that “…America is the only place where you can pull into a gas station in a Jaguar and not have any money to fill it up.”

You can likely name your friend or acquaintance that has “keeping up with the Jones” syndrome. Some people are just committed to the attainment of material possessions in spite of their ability to afford them.  A swipe of a credit card can keep them in the lifestyle they think they deserve. And why do they think they deserve it? Simple. Why not? It seems that the old American tradition of living frugally and within your means has been tossed out of the mainstream consciousness and replaced with I want it and I want it now.

Don’t get me wrong, I completely sympathize with the feeling of wanting to enjoy the finer things in life.  But the real trouble here starts when people confuse the attributes of wealth and financial freedom for actual wealth and freedom. I am here to tell you that true wealth, if not inherited, takes time to build. True wealth can be measured not by one’s possessions, but by the duration of time one can continue to uphold their lifestyle if confronted with financial duress.

The entitlement mentality is a reason for financial failure because when people suffer from it, they spend their money on stuff that makes them feel wealthy, instead of saving and investing in order to build true wealth.  In summary, your ability to control the need for instant gratification is prerequisite for financial success!


  • Jim Braun Reply

    I was taught how to balance a check book. We did not
    have any credit cards. I don’t think there were credit
    cards back in the 60’s.People just paid cash.Yes I do know assets I have 3 rental properties SFH. Looking to aquire more.

    • Ben Reply

      Right on, Jim!

  • Logan Reply

    I know someone that fits the entitlement mentality to the T. The difficult part for me to understand is that this person knows they are like this but unwilling to make changes or even sit down and face the facts. A simple excercise of putting income and expenses on paper can help start the process of change but even that is difficult for this person to do.

    • Ben Reply

      For sure, Logan. We all know someone like that…what do you do?!

  • Al Perez Reply

    Excellent material Ben. I enjoyed reading it.

    • Ben Reply

      Thank you, Al!

  • rumahdewi Reply

    just as you say ben. in number 1
    but as what i see, a lot of people lose their hope cause they say they have no startup assets, they can’t build a business..

    indeed, the god have given us the startup asset which is our perfect body, to chase our goal..

    • Ben Reply

      No excuses, right?

  • Paul Reply

    Really good article Ben!

    So thankful I found you and your site!

    Thank you!!!

    • Ben Reply

      Thank you, Paul!

  • Khani Reply

    All Valid reasons, but the main and primary reason people struggle- Inefficiencies in their respective Government Institutions and Influence of factor X (Private Interests) on global financial system.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.