Want to take your friends out as soon as your salary gets credited? Planning a short weekend getaway?
With a little bit of planning and a little less impulsiveness, the YOLO generation can also gratify their desires
Want to take your friends out as soon as your salary gets credited? Planning a short weekend getaway?
More people today believe in living in the moment than their previous generation. The “YOLO-You Only Live Once” wave is sweeping the “Save for the Future” plan into a corner. In such a climate, here are a few ways you can plan better, be well informed and know all of your available options to avoid debt, and in the process, use the new fintech coming into the market to become better spenders and managers of your finances.
Planning monthly expenses prudently
There is no doubt that today’s work culture is different from what it used to be a few decades back, as workspaces, employees and technology continue to evolve. Though an employee might want to rest after office hours, there are a lot of newer and more glitzy ways to unwind, like the post-Covid catch-up with friends whose faces you might have forgotten in lockdown, dining out, watching movies, etc. Only you can decide for yourselves what you consider necessary expense and what can be cut.
We are recommending cutting down on over-expenditure but in a way that is comfortable for you. Especially if you have big ticket purchases in the pipeline, such as buying a new washing machine, or paying for an online Business Management course. We recommend making a plan so that if you are thinking of taking credit, you know how to repay it. You must find out all about interest rates for credit cards, student loans, personal loans, etc. We also recommend that when you are planning, you put down all your expenses, balances, minimum payments and interest rates in the sheet, which will reveal a lot more than you know about your finances.
Being mindful and choosing the right mix of investments is something on which everyone can easily find information today. There are so many experienced bloggers and financial podcasts to help you take financial decisions. Investments in the form of SIPs are a great way of creating the right portfolio balance, and doing so is easy today with the advent of so many apps that eliminate the need of agents. Not only do these small investments help clear off debts, but also build a corpus for retirement and future needs.
Making lifestyle adjustments is not as difficult as one might think. Making minor lifestyle adjustments, especially if you have lavish spending habits is healthy. Keeping a check on unnecessary expenses can help a lot in money management, until all debts are repaid. You can always buy a car later or re-plan a vacation. Such things can wait. Also, whenever in debt, never shy to cry out for help from friends or relatives. In fact, approaching a debt counseling centre that offers free advice is one of the best options and is highly recommendable when it comes to cutting down the debt burden or finishing it off, once and for all.
Understanding Your Own Credit Card Usage
Although credit cards are useful for all kinds of purchases, what most people don’t know is the heavy interest charged on payment delays and revolving your credit. Credit cards will let you borrow money up to a set limit, which must be repaid, against heavy interest if you don’t pay your full monthly amount by the due date. You’ll also be penalised for late payments. On the other side, positive payment history over a period of time can help build your credit scores. We recommend always staying 30% under your credit limit to maintain healthy financial stability.
If you are using two credit cards, cut it down to one. Never take another credit card to pay off debts from the earlier one. Also consider creating an emergency fund, and use it for essential big ticket purchases instead of a credit card.
Buy Now Pay Later
Even though the concept is new, many shops now offer customers an option to buy now and pay later, along with offers for debit cards, at the checkout counter.
The Buy-Now-Pay-Later (BNPL) offer comes with all kinds of “Zero Interest” options. If you get these offers, take them after studying the fine print, instead of spending the amount at one go. Be proactive and cross-check with stores for availability of 0% EMI while purchasing expensive products.
Late payment fees on BNPL offers are also not exorbitant, and availing them is easier than a bank EMI or personal loan, making the experience convenient.
Final word
We can’t deny that easy credit availability in digital form has transformed the lending scenario in India. Today, all you need to do is install an app, complete a digital application process, get your loan approved, and spend it wherever you wish to. However, what we would suggest is for you to do a little bit of financial planning before taking money from the credit line.
With rapid evolution of technology, companies will continue to build more digital lending products, giving you easy access to credit. However, if you follow the aforementioned tips and maintain healthy financial hygiene, you won’t fall prey to any debt burden. It will also help you create a backup for emergencies. This generation is tech-savvy, and with a proper money management skill, they can lead a debt-free life with all their aspirations fulfilled.
The author is the Co-Founder of MoneyTap
DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.