Ways to manage your spending effectively, ensure credit score isn’t affected

Published: December 6, 2019 12:39:56 AM

If you do not pay your EMIs on time, your credit score will be affected

Financial management, personal loans, SIP growing, EMI, credit cards, PF statements, credit scoreThe monthly struggle to keep the SIP growing, and the recurring deposits financed is tough, keeping the external lures (call it shopping, eating out etc. etc.) away.

By Kamalika Some

Financial management is something that we all have struggled to conquer at some point of time or other. Both at the personal and professional front having a healthy financial state always does the trick. The opposite happens when they go all messed up, your concentration is hit, and your focus at more productive things takes a beating.

So, what did my financial constraint teach me that no other financial literature can’t?

The grass on the other side is not always green

When in a cash hunch, the best option people opt for is is loans, personal loans to be precise. Post checking the interest rates, I realized that though they lure through attractive advertisement, they don’t come cheap! Ranging from 16- to as exorbitant as 21%, personal loans need a brave heart to sign those loan documents.

Investments dry up faster than they can be built

The monthly struggle to keep the SIP growing, and the recurring deposits financed is tough, keeping the external lures (call it shopping, eating out etc. etc.) away. When the time comes, these investments are the first to work as a cushion against the financial troubles.

The unconventional sources of finance are the best

To practice this all what is needed is excellent repayment history. Burrowing from friends and family is interest-free (though not always), is built on trust and commands high respect for repayment dates. But again, trusting the conventional sources works in the long term.

Bad times teach you to make wiser decisions, true that! Here is what I did to wade off the uncharted waters-

Have a financial cushion: Salary may delay, but EMIs/ rental/ bills will not. Have funds secured in for expenses.

Keep credit cards at bay: With luring offers they are a trap.

Be true paying off EMIs: If you don’t honour this your credit score gets a bad hit.

Save: Even if it is a merge amount, it helps in emergencies.

Fund expenses on investment appreciation: This is something no one will teach! I got this tip from a friend who goes on trips en-cashing her investment’s returns. Wise isn’t it?

Save all the documents: In emergencies, when you are applying for loans, you must have all the documents handy, income slips, PF statements, rental documents. Financial mess is something we all have dealt, or are dealing. Prudent thinking always comes at a premium. It’s always better to be prepared than let stress take up all the peace.

Source: Tax Guru

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