Payday loans are often times taken out because of an unforeseen or unexpected blow to our finances. As much as we would like to have a savings or “reserve” to depend on when an emergency cost comes up, it doesn’t always work out that way.
Payday loans are short-term; meaning, lenders expect to be paid back with the borrower’s next paycheck. For many, though, it isn’t easy to budget for that. Looking at your finances and considering how and when you will pay your lender back is just as important as the reason you took out the loan in the first place.
Preparing your budget for a payday loan means, first and foremast, being realistic about whether or not you can pay it back. Even in the most dire of circumstances, you need to really consider how your finances will be affected by borrowing money on a short-term basis. Putting yourself in a precarious positon by taking out a payday loan may be detrimental to you in the long run. If you are concerned about having the ability to pay your loan back, you may need to consider other options such as borrowing from a family member, holding a garage sale or selling things online, or looking to a credit card that will allow you ample time to pay back what you borrow.
If you feel confident that you and your budget are in a position to borrow from a payday loan lender, look at how your finances for that following paycheck will be affected. You may have to be flexible in other areas of your expenses. Don’t be afraid to make changes to categories of spending that may offer more flexibility. For example, money allotted for entertainment, dining out, or “miscellaneous” may have to be put towards paying back the money you borrowed. Learning how to be adaptable to changes in your budget will increase your ability in the future for the unexpected.
Take advantage of budgeting tools such as calculators, spreadsheets, and planners in an effort to organize your financial picture and make changes where necessary. The Internet offers a bevy of websites that will help you design a budget as well as record and keep track of your spending, saving, and investing. It doesn’t take fancy software or expensive planners to help keep you focused, just the commitment to having a financial plan.
Most importantly, learn from a payday loan. Consider the fact that had you been prepared financially by having a savings account or “financial reserve”, you may have prevented the need to take out a payday loan in the first place. Expecting the unexpected is the best way to brace for unanticipated expenses. Start off by setting aside a portion of your paycheck that will go directly into a savings account. Most financial experts recommend saving 10%. Even if that’s still too much, make the commitment to put something aside every paycheck so you will afford yourself a financial cushion of some sort. Remember…it’s never too late to start saving and every little bit counts!