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An Expert's Guide To Planning Your Finances Better

An Expert’s Guide To Planning Your Finances Better

Managing your finances is an art and is a skill best mastered young. While staying debt-free is true financial freedom, you can use credit and loans in your early days whenever the need arises. All it takes is some self-discipline to manage your budget properly.

At the start of your career, it is easy to get swayed and indulge in unnecessary spending. The discounts and offers from the plethora of brands available can tempt anyone. However, when you apply for an instant loan and start treating it as an extension of your paycheck, you are setting yourself up for trouble.

What are the personal finance guidelines to be followed?

Create a contingency fund

Life is unpredictable and you never know what the future has in store for you. You are better off creating a contingency fund for any unforeseen emergency by setting aside a fixed sum or a fixed percentage of your salary. You can keep it in any liquid asset like a flexible deposit. This will ensure that you earn something while the fund is ready for use whenever the situation demands it. This fund is strictly for a contingency and should not be touched for any other purpose. You are sure to understand the importance of this fund on a rainy day, sometime in the distant future.

Plan and adhere to a monthly budget

Splurging on unnecessary items just because you have cash is not a very prudent way of handling money. A thing you don’t need is expensive at any price and should be avoided. Draw up a monthly budget and try to stick to it as far as possible. Avoid discretionary spending so that you can make prudent purchases whenever the opportunity arises. Learn to compare prices before making a purchase. In today’s connected world, all the information is freely available and you can always optimize your purchase decision. This will help you to adhere to your budget and rack up some savings.

Compare lenders before choosing a personal loan

Credit cards are an expensive debt option. If a last-minute small-ticket expense crops up, you can choose to take an instant loan which is available at lower interest rates. There are so many online lenders to choose from. You can compare their features and pick the one that suits you best. That will ensure that you get the best interest rate available.

Pick the right tenure

While the interest rate is decided by the lender and the loan amount by your actual requirement for funds, you have the flexibility to determine your tenure.

Using a personal loan EMI calculator before taking the loan is highly recommended. You will be able to work out the most comfortable EMI by tweaking the tenure. This will ensure that the EMI fits your monthly budget and is not a burden.

Maintain your credit score

Once you start earning for six months, your credit history is available and CIBIL generates a Credit Score. A credit score is essentially a numerical summary of your credit history. It is a number ranging from 300-900 with 900 being the highest. Usually, a score above 750 is considered good and most of the loan applications with this score get approved. Getting a loan is not the difficult part. It is important to pay your EMIs on time without a default. This helps you to maintain a high credit score and keeps your credit lines open in case of an emergency.

Prepay your loan as far as possible

Usually, most lenders specify the foreclosure clause in the agreement. You can foreclose the loan after six months by paying the principal in part or in full without any prepayment penalty. Please check the loan agreement for this clause. This gives you the flexibility to select the maximum tenure at the start of the loan. Once you service the loan for six months, you should deploy extra funds towards prepayment of the loan to reduce your interest outgo. This is a smart way of optimizing your personal loan.

At SmartCoin, we understand your unique needs and tailor our products to best suit you. You will find a customized solution for all your personal loan needs. They have been designed with your comfort in mind. Managing your personal finance is a responsibility that you need to shoulder. For any personal loan requirements, we are just a few taps away!

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