You all know that savings are crucial. Even though you are not earning a good amount of money, you try all your best to put aside money. Financial experts also suggest that you should stash away money as much as you can because this will help tide over during hardships. Even if you are living from paycheque to paycheque, you are recommended to put away money by cutting back on regular expenses. Well, it is hard to have enough money in your savings account when the cost of living is on the rise.
Now it has become more difficult because many of you are on pay cut because of the pandemic. Many businesses have seen better days and now shutting down, making a lot of people redundant. You can manage to make ends meet with your available savings until you land a job, and if any unexpected expenditure pops up, you can fund them with instant small loans.
However, there are many people who are worried about their financial situation regardless of the size of savings. It is quite surprising to know that many people think that you are doing well as long as savings are accumulating. According to a survey, many people think that using saving means committing a sin. They think that if they dip into them, they would be bankrupt sooner rather than later.
Well, you are paranoid if you have formed such a kind of mentality. You save money, not because to let it being idle until your last breath, but because you could use that money when a financial emergency pops up. Savings are meant to use when you need to dip into them.
You have a need
There are several situations when you will feel like drawing down on your savings is the right choice. For instance, you have lost your job. As you know that the economy is worst hit after the outbreak of coronavirus, you will likely take a longer time to land your own job. In the interim, you will need funds to manage your regular expenses such as utility bills, debt repayment, and the like. Now is the right time to use your savings to make ends meet.
Now taking another scenario, suppose you own a business and now struggling to make profits as before. You are facing difficulty meeting all of your regular expenses. Instead of dipping into your savings, you will likely prefer taking out instant cash loans. It can be a good idea provided you have stashed away your savings for another big expense. If you are avoiding using your savings because you are paranoid, it will be a terrible decision.
Although loans are available at lower interest rates due to the pandemic time, it does not mean you will borrow money despite having savings. Do not forget that the total cost of the loan includes interest along with what you owe.
Much as you cannot draw down on cash reservoir because that money is particularly for another expense likely to happen in the future, you must decide your affordability while borrowing money. If you take on more than your affordability, you will end up being in a debt trap.
You have a desire
Sometimes you do not need money for essential expenses. For instance, you need a bit more money during the festive season. During Christmas, people need more money to buy gifts and throw parties. Such expenses are not essential, yet you want them to burn a hole in your pocket.
There is nothing wrong if you want to spend money on yourself. It is fine as long as you can manage. If you have enough savings, you will probably not worry. However, if you are planning to take out a loan to meet such expenses, wait a moment. Loans can be an expensive deal – do not forget that.
Some lenders increase their interest rates during the festive season to make profits. Make sure that you are able to pay off the debt. A good rule of thumb is that you should use an online calculator to know the total cost of the loan and shop around before clinching a deal.
Now that you have come to know that the right time to use your savings is when there is a need.