Without a clear plan to manage or repay debt, people may find themselves trapped in a cycle of borrowing, where they use credit to cover basic expenses, further increasing their financial vulnerability.

Additionally, the lack of savings compounds the problem. When emergencies arise, individuals without a financial safety net are forced to rely on credit, often at unfavorable terms. Over time, these debts grow, reducing disposable income and making it harder to break free.

The key to avoiding debt traps lies in proactive financial planning. By creating a detailed plan, individuals can regain control of their finances and build a foundation for long-term stability.

First, budgeting is essential. A comprehensive budget allows you to track income and expenses, identify unnecessary spending, and allocate resources toward debt repayment and savings. Financial planning also includes strategies for managing existing debt, such as consolidating high-interest loans or negotiating lower rates with creditors.

Another critical component is building an emergency fund. A savings buffer of three to six months’ worth of expenses provides a safety net for unexpected events, reducing the need to rely on credit during crises. Finally, financial planning emphasizes setting clear, achievable goals, such as saving for a home, funding education, or preparing for retirement.