The cost of living in Australia has skyrocketed over the past few years, and we are all feeling the effects of it. It’s easier than ever to spend money, whether that’s grabbing a coffee on the walk into work, upgrading a subscription service, or simply getting groceries, everyday expenses have gone up a lot.
No matter what stage of life you’re in, everyone’s becoming more conscious when it comes to saving a little extra where possible, with many Australians tightening their purse strings. There are a number of expenses we can’t avoid though, from transport to and from work, paying our bills like a phone plan and utilities, and of course those periodic essentials like dentist and doctor appointments.
As a result, managing your finances can be challenging, especially when the bills feel neverending or you find yourself forgetting when loan payments are due. The good news is that, with the right understanding and approach, personal loans can serve as effective tools to help you regain control over your financial situation.
Understand your loan details
While managing your personal finance – especially when that includes loans – can be daunting. However, there are a few things to consider first that can help give you some clarity and take that stress away. To start with, you’ll want to review all the terms and conditions associated with your current loan (or loans, if you have more than one). Read it once, read it twice, and read it once more. Look out for the important information:
- Loan amount and terms: Know how much you’ve borrowed and the length of the loan. Note your direct debit dates in your calendar so you know when to ensure funds are available for each payment, whether it’s weekly, fortnightly or month.
- Interest rates: Understand your fixed interest rate and how it affects your repayments. If you are unsure about this or need extra information, contact our team today and we will work with you.
- Fees and charges: Know the additional charges associated with your loan. These can vary significantly and might include penalties for missed payments, or even early repayments if you wanted to clear some debt in advance. You may also see fees for account management, too.
Rapid Loans doesn’t charge early repayment fees, so you have freedom to get ahead on your loan and save on interest. And, if you have loans with a few different lenders, we also offer debt consolidation, meaning you can pay everything off with the money we lend you, then pay us back over 12 to 60 months pending approval.
Identify areas to reduce spending
Your finances need attention and careful consideration and when you’re trying to pay loans off and get your financial freedom, a good way to start working towards that is by looking at your outgoing costs and deciding whether they’re absolutely essential. Even reducing the frequency with which you’re spending money on non-essentials can make a difference in getting on top of your loan repayments. Here are some simple changes that can make a significant difference:
- Dining out: Opt for home-cooked meals instead of purchasing takeaway
- Transport: Consider getting public transport to work instead of driving, not only does this help save you money on fuel, but you won’t need to think about parking fees either
- Subscriptions: Review and cancel any unused or unnecessary subscriptions, alternatively, you can have a look at whether there’s a free version or downgrade your subscription service and save the difference
Create and adhere to a budget
Budgeting isn’t everyone’s forte, and every budget will look different depending on your circumstances and priorities, but they can help you on your way to financial stability. Setting aside some time to sit down with your pay slips, bank statements, and a spreadsheet will help you get that clarity. It’ll help to highlight how much is going out, how much is coming in, and can show you how much you can save when you let go of the non-essentials. It might sound boring and tedious, but it’s the best way to completely understand how money flows and your financial position.
- Track income and expenses: document all sources of income and monthly expenses, this is the foundation of your money going in and out
- Set spending limits: assign specific amounts for categories like groceries, utilities, and entertainment – colour coding things in a spreadsheet can also help to show you what the must-haves are and keep them separate from the non-essentials
- Monitor progress: regularly review your budget to ensure adherence and adjust as needed, especially if your financial circumstances change – whether that’s due to a pay rise, or a new purchase that you’re paying off like a car loan
Pay with cash
While it might sound a little old fashioned, paying with cash can enhance your awareness of spending habits. This may not sound significant, but cash is a lot harder to part with rather than just tapping your card, and with the introduction of mobile phone payments, those little transactions are easy to do – but may also be contributing to more money leaving your account than you realise. When you physically hand over money, you’re more likely to consider the necessity of the purchase. This exercise might combat impulse buying and keep you within your budget.
Write a shopping list
Making a shopping list before you leave the house can ensure you don’t put anything unnecessary in your shopping trolley. This simple technique helps prevent impulse purchases, saves money, and reduces waste.
Managing your finances and personal loan can feel difficult and overwhelming, but it doesn’t have to be. By implementing these small strategies, you can effectively manage your personal loan and improve your overall financial health. Remember, small consistent changes can lead to substantial long-term habits and benefits.
This article is intended as opinion only, and not as a sole source of guidance. It does not take into account your individual circumstances.