The tendency to borrow money is quite common, and it isn’t necessarily a negative thing. Education or home loans are beneficial because they help you transition to a lifestyle that you desire. However, paying off your loans, outstanding dues along with meeting other financial obligations can get overwhelming. Thus, it becomes imperative to learn how to repay debts.
Here are some ways for you to manage your finances
- Plan your budget
It is crucial to know your expenses so that you can work on your income and pay off debts faster -accordingly. If you try to spend less, you will have surplus cash in hand to help you pay off your debts faster. When you plan your budget, make sure to work on an emergency fund. This can come handy at times.
- Make a list of your debts
Once you’ve planned your budget, you can list all your debts, including EMIs, borrowings, etc. By doing so, you can determine costlier debts and thereby priorities them accordingly.
- Find a passive income source
It should go without saying that if you work a side hustle, you earn more money and thus have more money. The surplus can then be used to pay off debts.
- Avoid using credit cards
When using your credit card, you buy something with money you don’t own. This adds to your debt, thereby reducing your savings.
- Control your splurges
When trying to come up with ways to pay off debts sooner, it is essential to control your spending habits, start being frugal, and saving more to clear your debts.
- Consider mutual funds and stocks
Make your money work for you by investing your surplus cash in high-performing mutual funds or the stock market. Depending on the investment avenue you choose, the duration of your investment, and market conditions, you could earn attractive returns that would help in clearing your debts. For this, you would need to understand how the market functions and keep yourself abreast with the latest development across sectors if you want to make the most of your investments.
A successful investment takes into account your risk tolerance, investment horizon and financial goals. To ensure that your investments meet these criteria, it is prudent to reach out to a financial advisor who can curate bespoke plans based on your financial goals, limitations, risk appetite and age.
Paying off your debts without resorting to personal loans offered by financial institutions or borrowing money from friends or relatives requires careful financial management and healthy money habits.
One way to inculcate good money habits is investing in avenues that align with your investor profile. Reach out to an expert today and get started on your investment journey.