When it comes to financial management, you cannot follow the crowd as what works for others will not always work for you. The living style, earnings and personal circumstances of everyone are different. You will take a decision based on your own circumstances. Solutions abound but what if you choose the one that is not in your interest? Many people follow the trends without realizing their needs and situations, and in the end, they end up being broke. The cost of living is rising, therefore it is essential that you manage your money as carefully as possible. Here are the personal finance trends that you should avoid along with alternatives.
Taking out payday loans
Payday loans are easier and faster than ever. Whenever you need money, you just have to fill out the application form and the lender will immediately disburse money. More than 80% of people rely on these loans when they need money during the emergency. However, most of them end up rolling over the loan as they face extreme difficulty paying off the debt with very high APR. The average rate of APR of these loans can be up to 400% or more. These loans are extremely dangerous who are living from paycheck to paycheck. Since the length of these loans is not more than a two-week period, they can throw you in a permanent debt cycle. Checkout Zapier vs Integromat – Quick Comparison Review.
When you want to borrow money, you should seek alternatives to payday loans. The best alternative is text loans from direct lenders. These loans require no credit check so you can get money transferred in your account within a couple of minutes after approval. Make sure that you choose a reliable lender like London Loan Bank who charges lower interest rate as compared to the others. To manage repayments easily, you should look for a side gig, make a budget, whittle down expenses and sell unwanted things.
Using investing apps
Investing apps are pervasive and their demand is rising among users who want to secure their future. These apps allow you to create a budget, save, and invest money. You just have to set the limit before seeing the magic of returns you make on your investment. These apps can be a great way to hone investment skills. They do not require too much effort. Once you get to know how they work, they will put you on autopilot.
People invest in these apps with the hope that it can help them stay within the budget as well as earning some money, but you do not notice that some apps charge higher expenses. Using these apps mean that you are paying money for managing your investments. For instance, if you use Stash that charges $9 per month and you are investing $50 every month, the total investment at the end of the year will be $600. If you compare the cost with annual investment, you will find that the cost is whopping 18% of your portfolio. This is too much amount.
There is no problem to use investing apps as long as they charge very little amount for services. However, you should also try to deposit money in your savings account and buy stocks from companies. Container Freight Station: Changing Global Trends.
The market of digital currency is not thundering as in the past, but it still trickles the fancy of many people especially novice investors. A large number of investors are looking forward to investing in it as it is decentralized and less susceptible to fraud and theft. The downside of these currencies is they are very dynamic. Their value can go up and down as faster as possible. Though some currencies follow security issues, bitcoin block-chain is a public network, which means data is open to everyone. Another problem is many people are still not aware of the right method to use this technology. They do not many features and functions of these currencies.
You should invest only 5 to 10% of your portfolio in digital currencies. Invest in stocks, bonds and real estate. Real estate investments will help you earn a big amount of money as the value of property continues to rise.
Relying on credit cards
When you need money to finance your small expenses, you often swap your credit card. This makes the most convenient way to make a purchase when you are running out of money. Since you continue to swap your credit card, soon you max out it. This raises your credit utilization rate and pulls your credit score, making more difficult to take out a loan down the road. The problem with using credit card is you end up paying high interest rates. This continues to add up unless you settle all of your dues.
If you want to use your credit card during emergency, make sure that you do not utilise more than 30% of the balance and try to pay off the dues as soon as possible. You should create an emergency cushion for a rainy day. Every month contribute at least 10% of your monthly salary to your emergency cushion. Create a budget to track your spending and stick to it. This can prevent you from using your credit card for small purchases.
The bottom line
Instead of following trends blindly, you should analyse whether it will work out or not. Do what favors your financial condition and works in your interest.