How to avoid debt problems –
Introduction ๐
It’s really common to need to borrow money at some point (even celebrities do it!)- but for many people, debt becomes a problem. ๐
Struggling with debt can result in some really difficult consequences like fines, bill increases, eviction (having to leave your home), or potentially even going to prison. ๐
With this in mind, how does debt become a problem?
How do you avoid debt problems?
Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.
How debt becomes a problem ๐ช๏ธ

Debt becomes a problem when you:
1. Spend too much ๐ธ
Debt problems usually start with spending too much.
It can be a really easy mistake to make!
Maybe you get forced to spend too much money due to an emergency like:
- An unexpected bill ๐งพ
- Your car getting stolen ๐
- Losing your job ๐ผ
- Your phone breaking ๐ฑ
2. Borrow ๐ณ
If you spend too much, you might suddenly have to borrow money to pay for things.
3. Spend more because you owe money ๐
If you borrow money, you have to pay interest to say thank you for the loan.
What is interest? (easy explanation) ๐
This makes you spend even more money!
4. Borrow more ๐ฐ
Sometimes paying back loans can be so expensive, that you have to borrow more money, to pay for things.
5. You have no money left, because it’s all going towards paying back debt! ๐ฅ
Eventually the debts you have get so big, you have no money left!
You get stuck in a spiral and the money you owe keeps getting bigger. ๐ป

7 steps to avoid debt problems ๐งโโ๏ธ
1. Budget ๐
Budget = a financial plan.
In our “How to keep control of your money ๐ธ” article we explain that the trick to always having enough money is to:
โMake a good amount of money โ spend as little of it as possible.โ ๐ฐ
If you create a budget, you can keep an eye on:
- how much money you make ๐ฐ
- how much you spend ๐ณ
- where you can increase your income ๐
- what you spend money on ๐๏ธ
- where you can save money ๐
It doesn’t have to be fancy, it can be as simple as asking yourself these 4 questions…
1. How do I make money? How much do I make? ๐ช
Write down all of the ways that you make money and how much you make every month.
Maybe use online banking or try out a financial tracker app to help you track your income?
2. How do I spend money? How much do I spend? ๐ณ
Write down all of the ways that you spend money and how much you spend every month. It can be very easy to underestimate how much money you spend so be as accurate as possible!
Even small purchases quickly add up.
Maybe use online banking or try out a financial tracker app to help you track your spending?
3. Do I bring in enough money to reach my goals? How can I increase my income? ๐ช
If you think that you’re not making enough money and can make more, write down some ideas to increase your income.
4. Do I spend more money than I earn? Do I spend more money than I need to? How can I reduce my spending? ๐๏ธ
If you think that you’re spending too much money and can spend less, write down some ideas to reduce your expenditure.

2. Track your money ๐ต๏ธโโ๏ธ
How often do you check your bank account? ๐๏ธ
Every month? ๐ฌ
Every week? ๐
Every day/couple of days? ๐คฉ
The more often you check on your money, the better! ๐
Tracking your money helps you to:
- Stick to your budget ๐
- Stay on top of your spending ๐งโโ๏ธ
- Notice when someone has charged you too much ๐ต๏ธโโ๏ธ
- Notice when your bank account has been hacked! ๐ฎโโ๏ธ
3. Spend wisely ๐ง
The first step to getting into debt problems is to spend too much. ๐ธ
So – it’s really important to spend wisely!
This means, it has to be worth it when you spend your hard-earned money! โจ
To make sure it’s worth it, before you buy anything, you can ask yourself questions like:
- How am I feeling? Am I buying this because I feel pressured to, anxious, or because I’m celebrating? ๐
- What else could I do with the money? ๐คทโโ๏ธ
- How much would I use the thing Iโm buying? โ
- Could I get it cheaper? ๐ธ
- Can I actually afford it? ๐ฐ
4. Consider insurance ๐
Getting insurance is where you pay money to “protect yourself” from different emergencies.
If you find yourself in the emergency, you will often be given emergency money to help you.
You can pay for insurance to help you in situations like:
- Your phone breaking (mobile phone insurance) ๐ฑ
- Pets getting sick (pet insurance) ๐ถ
- Your car getting stolen (car insurance) ๐
- A house fire damaging your building (buildings home insurance) ๐ฅ
- Flooding damaging your belongings at home (contents home insurance) ๐ฟ
- Losing your income because you’ve become ill/disabled (income protection) ๐ผ
- You or your partner passing away (life insurance) ๐ฅ
- You getting a critical illness (critical illness cover) ๐ฉบ
- Having troubles on holiday like getting burgled (travel insurance) โ๏ธ
If these emergencies happen you can get paid a sum of emergency money when you have insurance cover in place.

5. Build savings ๐ฐ
Financial emergencies are a lot more common than you think. ๐ฅ๐
One minute your bank account seems full – the next you find yourself needing money for things like:
- Unexpected bills ๐งพ
- Car repairs ๐
- Pet veterinary bills ๐ถ
- Increased shop prices ๐ท๏ธ
- Phone repairs ๐ฑ
- Broken fridges/freezers/washing machines ๐ง
- Home repairs ๐ก
Not only are these events really stressful –
It makes it so much worse when you have to worry about scraping the money together to cover those costs. ๐๐ธ
Having an emergency fund is probably the most important step towards getting in control of your finances. ๐ฃ
Having a pile of savings set aside gives you: ๐ป๐ฐ
- lower likelihood that you need to borrow money in an emergency ๐ณ๐งฏ
- peace of mind knowing that you have something in the bank to cover you ๐งโ
Emergency savings give you a great safety net. ๐ฅ
I mean who here wants to lie awake at night, worrying about their washing machine breaking? ๐ค๐ญ๐งฝ
Whilst this is a really important step – it isn’t easy. It takes a lot of patience, work, and self-control to build up emergency savings ๐งโโ๏ธ
How to keep control of your money ๐ธ
How much money should I save for emergencies?๐ธ
The 3 month rule 3๏ธโฃ๐
Some financial experts recommend that you need 3 months’ worth of your typical income saved away for emergencies.
This means that if you make ยฃ2,000 a month, some experts think that you should have ยฃ6,000 saved away for emergencies. ๐ฐ
This means that if you lost your job or income, you would have 3 months to fix it before it becomes a bigger problem! ๐ ๏ธ
If your job or income is less stable, you may want to consider saving more e.g. 6 months’ worth of income for peace of mind. โ๏ธ
Did you know?
In June 2021, Yorkshire Building Society found that 1 in 5 UK adults have less than ยฃ100 in savings.
If you have less than ยฃ100 in savings, it’s a great time to start saving! ๐ฝ
Save regularly
Try to commit to saving a regular amount every month for emergencies. ๐
If it’s a struggle to get money saved quickly, saving 10% of your income might be an easier start. –
If you make ยฃ2,000 a month, you could save ยฃ200 a month, and reach your ยฃ6,000 emergency savings goal in 2.5 years. ๐ช
Having an emergency fund can help you to feel more prepared for the future and financially comfortable.
It could be a good idea to keep your emergency savings in an easy to access, separate savings account, to avoid accidentally spending them. ๐ฆ๐ธ
6. Borrow carefully ๐ณ
Make sure you understand the debts and know exactly what you’re signing up for. ๐
Weigh up the pros and cons of borrowing the money! – Check out our list of potential pros and cons in “Is borrowing money a bad thing?” โ๏ธ
You could also ask yourself some questions like:
- Do I definitely need to borrow for this?
- Am I borrowing to buy something I need – or is it just something I want?
- Can I get it cheaper?
- Is this affordable?
- How many things have to go wrong until I can’t pay this off?
- What happens if I can’t pay?

7. Get help – look out for spirals! ๐
Millions of people struggle with debt in the UK, and the biggest step is admitting that you need help. ๐ฃ
If you notice your debts starting to spiral, it’s important to get help as soon as you can. ๐ฒ
In the UK, you can get free help and advice from places like:
- Your lender
- Your bank
- Moneyhelper
- Citizens Advice Bureau – https://www.citizensadvice.org.uk/ – “The Citizens Advice Bureau give people the knowledge and confidence they need to find their way forward – whoever they are, and whatever their problem. Their network of charities offers confidential advice online, over the phone, and in person, for free.”
- Stepchange – https://www.stepchange.org/ – “Contact the UK’s leading debt charity to get expert debt advice and fee-free debt management to help you tackle your debts.”
- National Debtline
- Your local government/council
The sooner you get help, the sooner you can stop the spiral! ๐ช๏ธ
Conclusion ๐
So that’s it!
You can avoid debt problems by:
- Budgeting ๐
- Tracking your money ๐ต๏ธโโ๏ธ
- Spending wisely ๐ง
- Considering insurance ๐
- Building savings ๐ฐ
- Borrowing carefully ๐ณ
- Getting help โ look out for spirals! ๐
Hopefully you’re feeling more confident about avoiding debt problems.
If you know any friends or family members who might benefit from learning about how to avoid debt problems, share this post with them!
Finally, don’t forget to check out our similar articles below!
Similar articles to “How to avoid debt problems” โฌ๏ธ
4 money myths you shouldnโt believe ๐ฆ
Why you should save for retirement when youโre really young ๐ง
8 reasons to start saving money now ๐ท
Is borrowing money a bad thing? ๐คทโโ๏ธ
8 bad money habits you should break๐ฐ
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