When the Minister of Finance of any government delivers his annual budget, most people listen out for the increase in taxes on their personal earnings, taxes on fuel and on their luxury items such as alcohol and tobacco products. Most people don’t listen out for the final analysis of how much the government is going to be in debt at the end of the exercise. There are very few countries in the world where the budget is balanced. Most countries, especially the ones in the developed world, tend to spend more than they collect. And often by considerable sums of money. Likewise, there are very few businesses that do not depend on borrowings such as overdrafts, bonds or special share issues, to keep on going.

If a government or business cannot balance its budget, does it come as any surprise that the man in the street is unable to balance his. Just like governments, people are spending more money than they actually earn. In line with the enormous amount of debt which governments and business accumulate, it is hardly surprising that people also look to borrowings to balance their personal budgets.

On top of that, in order to encourage consumption, advertising, special offers, promotions etc encourage the consumer to buy more and if necessary to borrow the money to do so. Business has to aggressively encourage consumption to be able to service its own debt burden and pay taxes. It’s a vicious circle. Add to that the financial institutions, which also need to lend out more money to increase their business.

The media awards celebrity status on people purely because they have large sums of money. A prime example of this is Paris Hilton, the heiress to the hotel chain owners. The world hangs on everything this person says and any act she performs, and only because of her family’s wealth. In order to live up to this “cool” state of existence, people borrow to support a life style they cannot afford. Advertising supports this illusion by saying that if you drive a Porsche for instance, you are cool, you have the “it” factor, you are acceptable. Likewise, replace your wardrobe every year with these fabulous clothes and you will be accepted by your peers as a worthy person.

One further huge problem in this debt merry go-round, is the fact that the average person, regrettably flitters his money away. With other words the bulk of the debt burden has been accumulated while spending on disposable items such as fashion trinkets and clothes, tech gadgets, expensive socialising at restaurants and pubs or holidays out of the country. Most probably then, the person groaning under the mountain of a huge debt burden, doesn’t even have an asset to show for it. Add this to the fact that many young people start their careers carrying a large loan from their University or technical college studies, and the problem can be almost insurmountable.

People who actually want to make an effort to reduce their personal debt and hopefully eventually live debt free, are finding this an extremely difficult task to start, never mind to succeed at. When everybody is buying goods and services far beyond their means, it is extremely difficult for an individual not to jump on the bandwagon and spend more than they earn. Never mind the fact that credit at the bank and in the form of cards is so freely available.

There are certainly many other factors that contribute to a person’s financial well-being or problems than the few mentioned above. Many cautious and frugal people could end up in debt not because they have spent beyond their means. Retrenchment for instance can put paid to savings and property ownership, as the person affected might need to cash in savings and sell property to survive. Besides these external factors, in general though, the people who find themselves with unmanageable debt burdens have just not been able to manage their finances correctly. This can be learnt, and possibly personal financial management skills should be taught at high school age. With effort and new skills most people will be able to work towards financial well-being.