Many of us just get by, making ends meet with our salary while slowly pursuing our financial goals on the side. But since this is usually not a big amount, it’s going to take much time before we finally achieve them.
Thus, some recommend taking out a small loan to achieve smaller financial goals faster. However, it’s important to think carefully to avoid incurring unnecessary financial burdens. If you’re thinking of taking out a small loan for the first time and you’re not sure if you should, here are ways you can put your first small loan to good use.
Investing in skill development
You may be aware of how rapidly digital technology is transforming our way of life. Imagine how much would have changed ten to twenty years from now, when you will be considerably older and the digital revolution would have progressed much faster than you expected.
Because there’s a need to adapt, there is no shame in learning at any age. Enrolling in programmes courses, workshops, and certification programmes for those who want to learn more and develop skills to make money in the digital age will be a long-term, soft investment.
For example, who knew that before 2010, writing would be an important skill because of search engine optimisation, or SEO? Gone are the days when it’s simply thought of as making works of fiction, as companies are now looking for people adept at writing SEO-friendly content. If you learned how to do this ten years ago,
Emergency funds or building financial safety nets
Saving money from our major source of income is helpful. But you also need to consider that there can be times when your savings might not be enough to cover emergency expenses.
During these times, it’s strongly advised to take out a personal small loan to cover any extra emergency expenses. This is especially true if you already know that your savings are not or just barely enough to cover what you’ll be spending at the time.
It definitely would have been better if you had enough money saved in this situation, but it’s better to borrow and just learn your lesson at the moment, and instead do better next time.
Pay current debt
Credit cards have many benefits, such as access to online payments, discounts, and other perks. However, if you are not careful, you can incur high-interest debt. In fact, one of the worst things that could happen is for you to spend a large portion of their monthly income to pay off interest on credit cards.
In case you’re already in that situation, one good idea is to get a small loan from a legal money lender and pay off the outstanding balances on your credit cards. You can also go for debt consolidation. This means converting your high-interest credit card debt into lower-interest instalment loans, thereby reducing the strain on one’s finances, simplifying debt management, and speeding the path to freedom from these obligations.
Conclusion
Taking out a personal loan isn’t necessarily terrible, as it gives you quick access to additional funds. However, it’s important to plan strategically on how you’ll spend it, whether it’s to resolve emergencies or invest in your skills.
If you’ve made up your mind about taking your first small loan, you can go to a money lender in Ang Mo Kio or anywhere else, as they can help you get one whose terms align with your needs and ability to pay back. Remember, if you are well-informed about loans and on good terms with the right money lender, you won’t be in financial trouble.
