The Pros And Cons Of Borrowing Money

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There will be a time in everyone’s life when you want or need to buy something, but don’t have enough cash to do so. When this time comes, you usually have two options; You can either not buy the thing that you wanted/needed to buy (or buy it later, when you have the money spare), or borrow the money from someone. If it’s an emergency or you’re really impatient then borrowing, whether it be from a loved one, the bank, or an online lender, will probably seem like a great idea. However, there is a lot to take into consideration before you borrow money from anywhere. Here are some pros and cons that you should know about.

+ Covers Emergencies

There is always a chance that something can go wrong in life, and sometimes, money is required to fix this problem. It doesn’t matter if you’re boiler has just broken, you get an unexpected bill, or you’ve just run out of money if you need money quickly then applying for cash loans online is usually the first thing that you think of.

– It’s Not Free

Everything comes at a cost, and borrowed money is no exception. When you borrow money, the interest rates can get incredibly high, with the late payment fees being even higher, so you need to be sure to make payments when they’re due and read all of the small print before applying. Even loved ones sometimes add interest to money you’ve borrowed, but, even if they don’t, if you can’t afford to pay the money back, the strain on the relationship is a high cost to pay.

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+ You Can Make Large Purchases

Unless you have a large amount of money saved, there are some purchases that you simply can’t make unless you borrow money. A house, a car, and business premises are the biggest examples. Your regular income wouldn’t be able to cover the cost of these things, but you can still buy them if you borrow money.

– You Might Not Be Able To Pay It Back

As I’ve already mentioned, there is always the chance that something can go wrong. Unfortunately, if there is an emergency, or you got paid less one month, you might not be able to make a payment, which means that a late payment fee might be added to the loan. If this happens a few times, the debt could get so big that you just can’t pay it back.

+ Opens Doors And Opportunities

Borrowing money isn’t always ideal, but sometimes, it is exactly what you need to improve your life one way or another. Buying a car would mean that you can travel further for work, which means that you might be able to get a better job. You could even take out a loan to start your own business, which could prove to be incredibly successful.

People borrow money for all sorts of reasons, but you should always make sure that you’re borrowing for the right reasons, and that you have the cash to make the repayments.

Securing Your Financial Risks One Good Business Choice At A Time

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How would you personally define good financial sense? From a business perspective, it can be hard to pin down. Not only does it seem like hundreds of investments are to be made to make your firm relevant, but actually earning the capital to do that can be hard. Even the best economist in the world might find it difficult to weigh up the individual needs of a business while predicting its continued growth in such a volatile free market. This can leave you feeling unsure of where to turn, and what practices to put in place to make sure the entire operation works for you, and not against you.

We’d argue that good financial sense, at least from a business perspective, consists in securing your financial risks one good business choice at a time. Not only will this help you methodologically assess what’s most important for your firm in this moment, but it will shield you with correct investment pathways, as you can see what works and what doesn’t, and navigate the path that way.

Allow us to go more in depth:

Insurance

When it comes to insurance, there are many coverage packages to offer. Insurance is much much than it claims to be. It not only gives you the opportunity to overcome and protect yourself from the difficulties of a failed investment or dealing, but it allows you freer agency to try something. For example, you’ll be much more fond of establishing your own delivery routes for products if you enact the correct.

Truck insurance, helping you develop your logistics from the very start. Online insurance will help you test that new VPN service more reliably, and stay secure in your cloud security. It will protect against staff shortages, business to business errors, and even office difficulties which put your business proceeds on hold. Insurance is the best and most pressing financial choice to make, because it’s so inclusive and so stress-reducing.

Skillsets

It’s always tempting to see the business through a lens. What resources are important to you are often defined in terms of manufacturable materials and bodies equipping your workforce. What is more ethereal and hard to pin down is the skillset of your employees, some which might not even show on the resumes they applied with. It’s in your interest to develop a better and more inclusive relationship with your staff, developing their needs ahead of your own.

Not only will this help you develop their motivation, but it will also help you assess any potential which you can develop further, creating a wholesome and adaptable staff member. This can help you diversify their duties, or simply avoid hiring two salaried members when you can’t afford it. Make sure to balance their workload effectively, and you’ll have a fluid and capable work force who continually see you investing in their development and education. This can foster brand loyalty like nothing else.

With these two initial steps, financial security and wisdom is that little closer to being yours for the taking.

Learning about Money- the Financial A, B, Cs

When it comes to learning about money there is so much information that it is challenging to know where to start. That is no excuse however for burying your head in the sand and making money someone else’s responsibility.

This simple guide outlines a few essential money principals.

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A is for Awareness

Typically people know how much they earn. Whether it’s by the week, month or hour, you know how much you earn and notice when something is different. But what about the other side of the equation? Do you know how much you spend?

Lack of awareness of spending can lead you to run out of cash, go overdrawn or rely on credit cards. Each of these has financial consequences. Being in charge of your money gives you a sense of wellbeing and control. A good place to start is by checking your bank statement, either online or a paper version. Go through line by line, can you identify each item? Many people find things they do not recognise or regular payments which they had forgotten about such as subscriptions. Maybe you accepted a trial offer which now is being charged?

Another example of awareness is being conscious over small regular amounts which you might spend every day. If you spent for example £5 a day on lunch, that may equate to over £1000 during a year. Would it be worth making a sandwich or salad at home and have £1000 for a holiday or other purpose?

B is for Budget

For many, Budget is a four letter word, but it need not be a negative. Taking a few minutes to plan what you are going to spend is a great step to putting you in control of your money and not the other way around. You can set a budget for any area of your life including fun and socialising. Many people find that by setting aside money for fun purposes means they can enjoy it more and be free of any guilt that they should be saving or spending the money elsewhere.

Setting a budget is a really simple task. Take a few minutes to list all the areas in which you spend money, then put your best estimate of the amount you currently spend next to it. When you add up the figures hopefully the total will be less than you earn. If not you will need to adjust the spending until it does. While you are feeling virtuous why not include a category for saving and reward yourself with a fun or play budget which you have to spend each month.

C is for Compound Interest

Einstein described compound interest as the eighth wonder of the world. The trouble is that it can work for you or against you. If you are paying interest on loans or credit cards the power of compound interest is increasing the debt and draining your current and future income.

If you have an outstanding balance on a credit card and just pay the minimum percentage each month it may take over 20 years to clear the debt! If you are only able to pay a fraction each month, make sure you are paying a fixed money amount rather than the percentage sometimes offered when you take out the card.

With interest so low at the time of writing there may seem like little incentive to save. This may be true in terms of financial gain from the savings alone, but the accumulated money saved can eventually be invested and grow at a better rate. The habit of saving money and living on less than 100% of your income is the important financial gain.

The Best Places To Invest Your Money

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Making money is one thing, but knowing where to invest, it is something else. Smart investments can see huge returns for very little effort on your part. Money that is not being invested or gaining interest in some way is being wasted. With that in mind, here are some places where you could invest your hard earned money.

Bank Savings Account

You should always search around for the best possible savings account.You want one with the highest interest rate possible, so using comparison websites and Google searches will help you with your research. Some banks also offer one time sign up offers, so you might be able to get some bonus money or a free gift, too. Once you have decided on a bank account and have put money into savings, all you need to do is wait for the interest to accrue. This is something that will happen every year, and it means that your money is safe for when you need it and you are slowly gaining more of it. However, you shouldn’t be afraid to switch savings accounts if your current bank drops the interest rates or somewhere else is offering a better offer. Being aware of the financial market and how the changes in interest rate affect your savings is also important.

Stocks and Shares

Both stocks and shares can be a little risky. There is a chance that if you make some poor investments that you could lose your money. This is why it is important that you either get professional advice or spend considerable time researching and understanding how the various systems work. However, if you know what you are doing or have consulted a professional, then you could stand to make a lot of money. Stocks especially require you to constantly monitor what is happening, and thanks to apps like eToro everyone can get involved in the stock market and easily keep up to date with their portfolio. Shares, on the other hand, tend to pay out a dividend each year or allow you to sell them in the hopes of making a profit.

Housing

The housing market is a popular place to invest your money. You could invest in buying a flat or house for the purposes of renting. Or perhaps you know how to renovate a house and then flip it for a profit. Both of these are excellent investment choices. Whichever you decide to invest in you might want to consult a property management company. They can give you the best advice and provide all kinds of services that make you housing investment a more fruitful venture.

Shipping Containers

This one might sound odd, but you can, in fact, invest in shipping containers. One website claims a 12% rate of return which far surpasses something like a savings bank account, so this could be something worth investing in. Like any investment, though it isn’t without its risks and as such requires the same level of research and consideration. There are also many different companies you can invest through, and you will need to research the best one for you.

Credit Card Debt – Are You Paying Thousands in Extra Interest?

Millions of people around the world use credit cards and despite our best intentions of clearing the balance very month, most of us will carry a balance. In fact the average outstanding credit card balance is $5700 in the USA (source ValuePenguin) and is over £2500 in the UK.

Chances are when you take out a new credit card you will be offered the opportunity to pay via direct debit either the full balance or the minimum amount every month. Since most people use credit cards as flexible spending for emergencies or contingencies it can be difficult to commit to paying off the full amount. This is especially true when transferring a balance from another card.

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Statistics show that over 65% over credit card holders carry a balance from month to month

Did you know that if you opt to pay the minimum balance you could take over 20 years to pay off the card? It is far better to agree a fixed monetary amount each month than the percentage which is often suggested by the credit card company.

The video below explains in more detail and you can prove it for yourself by using a credit card calculator

For more financial education tips and videos visit The Personal Finance Academy