Personal finance management is a crucial technique that separates the best from the rest. The intelligent ones save more and spend less. Some others spend more, but primarily as an investment. If you belong to neither of these two categories, you must read this article until the end, as we discuss the top mistakes uninformed people make while shaping up their personal finances.
4 Mistakes People Make While Managing Personal Finances
Mistake 1 – Apply For Too Many Loans
Life is full of trials and tribulations. An instant small loan or personal loan app can act as your trusted companion during times of crisis. However, some people habitually apply for a loan whenever they face a financial issue. Heavy reliance on loans can disrupt your financial management. You may get into a debt trap and find it challenging to come out of it.
Although instant small loan appsare there to help you tide over any financial crisis, you need to deal with them sensibly. Borrowers often check the first page of the app and apply for a loan without realising that the terms might not be in their favour.
Hence, the first mistake you need to avoid while managing personal finances is applying for too many loans without reading the terms.
Mistake 2 – Spending Like a King or Queen
Whether you have a kingdom or not, spending like a king or queen can land you in big trouble. With inflation eating up most of our earnings, you can invite a financial problem if you do not control the urge to spend. Although a personal loan app can help you, that comes at a cost.
Quite often, people cannot resist buying garments or ordering food they could do without. While a bit of spending now might not seem much, you might receive a shock when you add the amount for a year. Consider cutting down some of it and saving it for rainy days. And, you can be happier than a king or queen.
Creating a budget is the first step to financial prudence. Financially wise people spend 40% of their monthly income and invest the remaining 60% across multiple asset classes like stocks, mutual funds, sovereign saving schemes, and commodities. This helps them cushion the impact of price rise and create a fund for the future.
Mistake 3 – Rushing To Make a Big Purchase
Big brands have become more ingenious than before. They bring all sorts of promotional offers to charge you up into purchasing. It is not uncommon to see people downloading instant small loan appsto grab that unbeatable offer. While the interest rates offered by instant small loan apps are competitive, you will still need to pay a considerable amount as the interest.
Remember, new stuff remains new only for a few days. As the honeymoon days pass, you can feel the urge to buy something new. Hence, the money you spent on a big purchase might or might not give you permanent satisfaction.
Therefore, before making a big purchase, think twice about its impact on your finances. Buy only when you are calm and not when you are excited.
Mistake 4 – Not Involving The Partner
Having a partner is beneficial for two reasons. First, they can contribute towards a mutual goal. Second, some loans give special benefits to women applicants.
If you consider yourself the sole financial decision-maker in the family, it is the best time to rethink. When you involve your partner in financial decision-making, your pressure subsides. For example, if you apply for a loan from an instant small loan app where you are the sole applicant, your eligibility will be low, and the repayment liability will be entirely yours. In contrast, if you apply with your partner, the lender will club both applicants’ income and increase the eligibility.
Hence, try involving your partner while making financial decisions, as that may enable you to save more.
Personal finance management can reduce your dependence on a personal loan app. However, there are times when nothing seems to work in our favor. An instant small loan app can be your best bet during such situations.