As an inseparable aspect of our lives, monetary and financial matters must be given utmost attention and importance. During the peak of our youth, when we embark upon our careers, we tend to be naive regarding the aspects of financial management involved in day-to-day fiscal matters. The first time we face obstacles while obtaining a short term personal loan is when we realize the need to be educated in financial matters. The slightest miscalculation might hurt your ability to get credit, so here are 4 things to keep in mind to avoid financial risks:
1. Limit the Number of Cards
Keep the number of cards you use in control. Maintaining multiple debit and credit cards make you lose track of the amount spent, and the transactions carried out. It is a gross misconception to perceive an individual with multiple cards as prosperous and judicious in terms of fiscal matters. While the maintenance of a few cards indicate that you are a credit-worthy, using too many cards and struggling to pay back on time creates a negative impression. Those who struggle with bounced cheques and payment overdue, often find themselves applying for a loan for low CIBIL score, which can prove to be arduous in the long run.
2. Take Responsibility for Loans
It is important to keep in mind that loans are not free money. Banks survive on the premise of taking deposits from us at low-interest rates and lending it to others at higher rates. Loans with high-interest rates and short terms create cyclical debt traps, which will lead you to re-borrow and roll over repeatedly. Be aware of your expenses, and make loan payment a priority. Inability to pay loan providers back, will have dire consequences and hamper your credibility.
3. Be Aware of Financial Terms
A lack of awareness can create great setbacks for you while you delve into finance as a realm. Your credit-worthiness is most affected by your CIBIL score, which records the credit history of all individuals and maintains a score that aids banks to take lending decisions. You should keep checking your CIBIL score intermittently, and attempt to improve the same in case it is low. Emergencies and dire situations might crop up at any point in life, and it is best to be aware and prepared at all times.
4. Don’t Leap Before You Look
A common tendency, especially among young individuals, is to leap at lucrative-appearing offers and take hasty financial decisions. Be it for buying appliances, clothes, furniture, or a car, our emotional response to offers often precede our logical senses. Impulse purchases for expensive products might lead you to exceed your credit card limit, invest in a fund, or take a short term personal loan. The goal is to be pragmatic and frugal, where purchases are in sync with requirements and credibility. While making important purchases, look for hidden costs, compare rates of interest or return, and check long-term affordability. Only then, should you arrive at a comprehensive decision.
These are a few pointers you must keep in mind while handling financial matters. Although finance is a diverse arena, one can stay safe from financial risks by keeping themselves up-to-date regarding contemporary financial trends. Stay safe, and be smart when it comes to money matters!