Many families in Australia are doing it tough right now. Between paying rent or a mortgage, buying food, paying for household bills, internet costs, school supplies, petrol and car maintenance, sometimes there just isn’t enough dollars in the bank to cover everything.
For some parents, the situation is so stressful that it is a constant battle to keep their heads above water. That is why many are taking out personal loans to alleviate their financial pressures.
Understandably, some people might be reluctant to do this because they don’t want to carry a debt. However, there is no question that, in the short term, at the very least, it can be beneficial to keep the household running smoothly.
That is because, when used wisely, these types of loans provide a little more flexibility in the family budget. There can even be some extra wiggle room to devote to fun moments you can share with your kids.
Here is how personal loans can help your family financially.
A personal loan is a set amount of money that you can borrow from a lender. You do this on the proviso that you agree to pay it back through regular payments. These payments are typically made on a weekly, fortnightly, or monthly basis.
Families often take out personal loans for various reasons. For some, it is to cover unexpected costs, such as the need to replace a washing machine or refrigerator. For others, it is to pay for a big expense, such as a kitchen refurbishment, that they don’t quite have the money for, to pay off in full.
There are several different types of personal loans available, and you can choose the loan amount that best suits your situation. You can also select a repayment term that suits your budget to give you both stability and predictability.
Generally, lenders offer personal loans to individuals in a decent financial position who they believe will be able to repay the borrowed amount without issue. However, this doesn’t mean you can’t secure a loan if you are not in one. For some families with a chequered financial history, options like EBP Money's unsecured personal loans with bad credit can provide them with a lifeline.
Maintaining a good cash flow is a key element in successful family financial planning. However, if you are struggling to achieve this, a personal loan can be incredibly helpful.
To start with, it allows you to spread your larger costs into more manageable repayments. This enables you to avoid the heavy burden of paying everything at once. It also means you don’t have to overstretch yourself.
Another significant benefit of taking out a personal loan is that it can help reduce your stress levels. With it, you can provide yourself with a little buffer that allows you to better manage your outgoing expenditure. This can represent a fresh new start, which you can use to formulate a stronger approach to budgeting.
By making your bills feel more manageable, it will become easier to stick to these financial goals. This could also make you feel more relaxed and give you room to focus on your kids, your home, and your daily routines, rather than constantly worrying about money.
When struggling to pay bills or facing unexpected costs, families often explore the various options available to them.
Personal loans are popular because they are a simple option. The repayments stay the same each week or month, so you know exactly what to expect. This makes budgeting much easier. However, some parents prefer to use credit cards for the convenience they offer.
It is advisable to weigh the pros and cons carefully before signing up for a credit card or applying for a balance extension. You might find that a personal loan can feel more manageable because there’s a single, fixed amount to pay off, rather than a balance that fluctuates over time. Credit cards sometimes have a higher interest rate as well.
Ideally, we would all be able to rely on our savings when faced with extra costs. However, not everyone has adequate savings built up. You may also not be comfortable borrowing from a friend or family member, as things could get complicated if you aren’t able to repay them.
Buy-now, pay-later services have also become quite popular. However, they can be difficult to track if you have multiple purchases in progress.
A personal loan is most helpful when used in conjunction with a clear plan. Therefore, you should start by working out what you really need the loan for. List those expenses and be honest with yourself about whether they are necessary and if you can afford to pay them back.
If you have no choice but to pay them off, make sure you only borrow what you need to make the repayments. Don’t be tempted to take out more for a little splurge.
It is a good idea to create a weekly budget that includes your loan repayments. Try to keep the repayments as small as possible, and if necessary, set up scheduled payments in advance or, at the very least, reminders for when payments need to be made. This will reduce the likelihood of your being hit with late fees.
Finally, try to reduce any unnecessary expenses. The less you have to pay in outgoing costs, the quicker you’ll be able to pay off your personal loan and even start to save some money for a family holiday. Here are some great places to think about visiting!
