An income shock is usually the most common cause of problem debt. It’s very rare to come across anyone that has deliberately overspent.
An income shock is when a situation or event that is unexpected and unplanned for creates a problem with your finances. It can happen to any of us at any time and can mean a significant drop in your income or require immediate changes to the way you budget.
You can certainly learn how to plan for some life events, & maybe save some money for a rainy day, but the truth is that not many people have enough spare income to plan or insure for every eventuality.
Nobody can predict the future, but there are many stages in life when important financial decisions are made based on calculated risk, or how you think or want things to turn out.
Here are some examples of income shocks: