Licensed Money Lender: Important Planning Tips for a Secure Financial Future
People mainly consider borrowing from a licensed money lender to handle their growing financial obligations.
Notably, unplanned financial habits can lead to unnecessary debt and undue stress if not managed by proper financial planning.
Therefore, in this post, we’ll discuss some crucial financial planning tips that will empower you to make appropriate decisions and give you a way to manage your finances better.
Financial Planning Tips when Borrowing from a Licensed Money Lender
Assess Your Financial Needs
If you are about to consider getting a loan facility, especially from a licensed money lender, the first thing to do is assess your financial status. Understand why you need the loan, whether for emergencies or at least a want. To assess your financial status, you should ask yourself the following questions;
- Is this an emergency expense?
- Is this expense met by just readjusting my budget?
- Can the required money be managed through other means, such as savings or borrowing from family and relatives?
Knowing why you are taking out the loan will help you decide on your financial goals. This is because, as much as possible, you should try to avoid situations that can be avoided and avoid falling into any extra debt.
Therefore, ensure any loan you apply for coincides with your financial plan and solves rather than creates problems for your finances.
Emergency Funds
An emergency fund is a financial planning tool that enables you to avoid unnecessary borrowing better. It’s a form of financial safety net that can help you cover sudden expenses without necessarily having to borrow from other sources.
Importantly, your emergency fund should ideally cover three to six months of living expenses. Therefore, set aside some money from your monthly income to develop a reserve that will minimize your reliance on borrowing in the future. It decreases the need to borrow money and generally increases a person’s financial stability.
High-interest savings accounts are considered emergency funds because people can let money grow while they still have access.
Plan for Debt Repayment
A debt repayment plan is crucial if you have already resorted to taking a loan from a licensed money lender. An organized plan will keep the repayments organized, resulting in fewer missed payments. This will translate to less interest paid over some time.
To effortlessly plan for your debts, write all your debts on paper, mentioning the loan amount, interest rate, and due dates. Always prioritize repaying the high-interest-rate loans ahead to save on the total interest costs.
Additionally, where possible, put aside some money towards the loan repayments. Also, make early payments or set reminders to make the repayments on time to avoid late fees. This keeps you regulated and will help you reduce the debt burden, enhancing your financial health.
Track Your Spending and Adjust Your Budget
Financial planning is all about going back and rechecking the spending estimation on a routine basis and adjusting your budget where applicable. Usually, the slight expenses add up over time and may one day play havoc with your loan repayment and saving ability.
Therefore, to help you with tracking, you can take any budgeting application or a simple spreadsheet. You can use any of them to track your income, expenses, and savings regularly. Next, highlight areas where you can cut back by closely analyzing your spending patterns and freeing up money for debt repayment or saving.
Apply the Budget Rule
You can use the 50/30/20 budgeting rule where 50 percent goes to necessary needs, 30 percent to discretionary spending, and 20 percent to savings plus debt repayment.
Always adhere to this rule so your budget may become healthy and not a financial burden.
Conclusion
Financial planning is not just about managing debt but also about building wealth. Therefore, as you become more financially literate, you learn more ways of investing in opportunities that create a financially secure future. You will likely find many educational resources and workshops in Singapore on financial planning, budgeting, and investing.
In the long run, by educating yourself, you can make your own decisions and devise a plan that minimizes reliance on debt.
Lastly, at Credit Empire, we will help you address your short-term financial needs by offering loans and financial advice on how to apply, use, and repay the loans without much hassle. Contact us today, and we will happily partner with you toward your successful financial future.
