Personal finance is about managing money and achieving goals. If you want to buy a car, you reduce some expenses to save for a deposit. Alternatively, check and pay debts that may affect loan approval. It could be home renovation debt, payday, or credit card dues.
You try to pay at least a minimum, if not full, to clear these debts before seeking car finance. Similarly, paying the dues boosts your credit rating and reducing discretionary expenses helps save for deposits. Thus, you exercise the right financial discipline to achieve your goal here. It is a clear display of personal financial management.
The blog states some strategies that may help you manage your finances better. It is the clear key to achieving goals timely, paying the dues and getting debt-free.
What do you mean by the term “personal finance”?
Personal finance involves decisions about generating income, spending consciously, saving, investing and retirement planning. A major aspect of this term includes budgeting and achieving financial goals timely. Creating a personal finance plan about how to earn, save and invest money directs you towards the goal. It prevents you from spending the money unnecessarily.
Instead, you try to make every penny count. The definition of personal finance does not stick to just basic concepts. Instead, it is a broader term that involves financial management at the personal and business level.
How does personal finance management help achieve life goals?
Let’s understand this with an example-
Suppose you are Will Santner and operate as a Digital Marketing lead in a company. You earn £11000/year, precisely £916.67 per month. However, you want to save money for an important knee surgery. You need at least £16000 ready to begin one. It is the average cost of knee replacement or treatment in the UK.
You check out the savings only to spot that you don’t have over £2000. Issues like knee pain and problems in walking affect your daily life needs. You want a quick solution to your needs but lack sufficient cash. When you stand at a crossroads, you search the possibilities to get instant cash. That’s where we help.
How does Cashloans2go help Santner finance the surgery?
You know you have a regular income but budgeting issues. You struggle to save money as your finances look like this:
| Parameters | Total amount you spend monthly (in pounds) |
| Rent | 400 |
| utility | 100 |
| Outings/movies/dining out | 200 |
| Weekend gateways | 200 |
| Total | 900 |
It means you spend £900/month with a monthly income of £916.67. It hardly leaves you with any scope for savings. Moreover, if you struggle to pay rent due to an emergency, it affects your credit score.
We at Cashloans2go guide you through improving your finances at the initial application. It does not hamper your expenses. Walking by the guidelines, here is how your finances look:
| Parameters | Total amount you spend monthly (in pounds) |
| (Switch to a cheaper rental) Rent | 200 |
| Utility(compare facilities) | 90 |
| Outings/movies/dining out | 100 |
| Weekend gateways | 80 |
| Total | 470 |
It improved your financial flexibility, increased credit utilisation rate and chances of a loan. However, your credit is poor due to pending rent and utility bills. Don’t worry. You may still get a same-day loan for bad credit scores with us. It may not get you the exact money you need. However, you can still finance your requirements by bridging the costs.
For example- you may get £10000 instead of £14000 with a bad credit score. However, we believe every customer deserves second chances and hence offer some terms. These may help you get the full £14000 for your knee replacement:
| Solutions | How does it work? |
| Provide a guarantor to get low interest terms | Guarantor’s and your finances reduces the risk with repayments and help you get affordable loan terms |
| Provide proof of an increment in salary or a new or high-pay job offer | An increase in income increases your affordability for the loan. Hence, you may get cheaper interest rates. Provide the proof of new job, promotion letter, etc. |
| Get a secured long-term loan by staking an asset | A secured loan demands one to stake a personal property (car, residential property, equity, etc.). It also help get a higher amount without paying more in interest and monthly Payments |
What else can help improve personal finances?
The first thing is to analyse your important payments to make monthly and set direct debits. Afterwards, take necessary steps to keep expenses on wants to the bare minimum. Instead, identify your current and long-term goals and set a savings account for this.
You can benefit from retirement, emergency and other long-term funds. It is especially true if you want to start a business after retirement. Moreover, setting up an emergency fund helps you navigate to surprising and unplanned costs. Here is what else you can do to improve finances:
1. Develop a strategy for debt clearance
Pending payments impact financial and personal growth. Therefore, start paying the small debts first. It will motivate you as your credit score jumps with every debt you pay. Alternatively, individuals with good and consistent income may clear their heavy debts.
Here, debt consolidation loans may also help if you have multiple bill payments. You can use it to merge payments into a single instalment monthly.
It boosts credit history, but you may face a temporary drop due to the impact the debt clearance causes on credit history. However, maintaining other payments like regular bills will eventually help you get the best credit score.
2. Have a clear goal before spending
One must identify the purpose of spending money on a specific need. Otherwise, your financial situation will never improve. Identify-
- Will it provide long-term value?
- Is it fair enough to buy this when you purchased it the last month?
- Will it affect other important goals?
- Do you need another credit card after just a month of buying one?
Such aspects will help you ensure responsible purchases. Moreover, it will eventually help you build this habit of making financial-friendly purchases.
3. Automate savings
Automating an amount monthly into a savings account helps build a lump sum. It is not necessary to save for some goal only. Instead, you can develop this habit of putting some sum safely. By this, you can benefit from interest also.
Saving a fixed amount for the long term helps you generate sufficient wealth. For example- if you save even £500 for 12 years every month, you can save around £72000 in 12 years plus the interest sum. You can use that to ensure a comfortable retirement or start a business.
Bottom line
So, you can see from the example how you may tackle and improve your finances if you need a loan. You can manage your personal finances by managing your savings, investments, and income. It is about achieving your short and long-term goals. Moreover, automating your bill payments, investments, and savings helps you stay on top of finances.
