Loans can work against you instead of for you if you’re not careful. It’s easier to rack up debts if you aren’t financially responsible. Digitalization has made it easier to release money at any time or to any location, but it still needs restraint to be properly used. It can be liberating to have all that access, but before you get spending-happy, there are a few habits you should keep in mind:
- The PoT (Pay on Time) principle
One truth about loans is that they must be repaid on time. Late payments will not only mean you’ll incur penalties, but they also will reflect badly on your credit score and adversely affect your future finances. For example, credit scores show how often you pay on time. The more punctually you pay, the higher your credit score is. Lenders readily lend to borrowers with good credit scores. Tala makes it easier for borrowers to repay by offering flexible payment options. Tala’s Loans Your Way was made to allow customers to choose their repayment date to better align it to their income cycles.
- Stop the whim purchases
One kind of loan that can be hard to pay is when it’s made on a whim. If a loan is taken in the heat of the moment, it can set buyer’s remorse if you’re not careful. Always check if you have enough funds to pay for this loan and where the money will come from. Tala’s microloans are designed to be affordable and are not intimidating to borrowers.
- Track your expenses
Trying to remember what you’ve spent at the end of the month can be difficult. But when you have a loan to repay, it’s a must. Making a list of the loans you’ve borrowed, along with all the rest of your expenses can keep you on track. It will be a guide for you as to when you should borrow again. Tala’s app helps you keep track of the microloans you’ve borrowed all on your smartphone.
- Save up
No matter how hard it seems at the moment, learn to save. Start with a hundred pesos every day and then increase the amount slowly. The amount that financial coaches usually advise is 10% of your total income every month. For example, if you are earning ₱40,000 a month, then make it a goal to save ₱4000 monthly.
Now while borrowers normally don’t save from their loan, it would be smart to optimize it. Maximize every peso. See if you can retain a small amount to save after using up the loan for its original purpose.
- Comb through the T&C
One habit you really have to practice is reading the fine print in your loan agreement. Unscrupulous actors may try to swindle you, or you may find out too late what the consequences of the terms are. Keep an eye out for the interest rates, payment dates, and any hidden fees you might not have noticed.
Tala is very transparent. It has no surprise fees and is compliant with the Truth in Lending Act (Republic Act No. 3765). Consider it a guide that makes loans a tool for empowerment, not a burden.
Old habits are hard to get rid of for most people, and creating new, healthier ones is ever harder---but they are ultimately more rewarding. Having more access to financial options means more responsibility for you to use it wisely. If you keep spending smart and wisely managing your loans, it will make your financial future stronger.
Tala is a global technology company building the world’s most accessible financial services. Their financial services provide customers with flexible, convenient, online microloans to help support the unbanked and underserved population. Tala has given more than 41 million loans totaling more than 3 billion USD to more than 7 million people across three different continents. Customers have used Tala products to start and expand small businesses, manage day-to-day needs, and pursue their financial goals with confidence. Start your journey into financial freedom: https://tala.ph/borrow/
Tala is operated by Tala Financing Philippines Inc., a licensed financing company with SEC Registration No. CS201710582 and Certificate of Authority No. 1132. Always study the terms and conditions and the disclosure statement before proceeding with any loan transaction.