4 Personal Financing Myths Busted By Loan Singh


Money! Money! Money! Must Be Funny, In a Rich Man’s World” – Abba


Money is an important aspect of our lives. We need money to purchase essentials, have a good standard of living, and even build a future. As is the case with personal loan myths, credit card myths and credit bureau myths, personal financing is also smeared with many widely believed myths. Being in the domain of digital lending, we at Loan Singh found it apt to bust the myths surrounding the above 3 topics. Here, we do the same with financial planning myths. One thing to note here is that millennials, mostly those living in Metros or Sub-Metro cities, perceive personal financing differently. Categories such as age, income, demographics, customs, lifestyle choices etc. influence how millennials plan their budget, credit and expenses. Before we get into the (now habitual) mode of myth busting, you need to understand what personal financing is, and what are its benefits.

What is Personal Financing?

Personal Financing refers to the effective management of your money. The purpose of personal financing is to organize, direct and control your financial activities in such a way that you manage your income proactively; rather than reactively. It allows you to accomplish monthly tasks such as bill payments, loan EMI payments, policy premium payments, utility payments like electricity, water, food, rent, shopping, grocery, etc.; without stretching your monthly budget.

The better we plan our finances, the more we can spend on ourselves for a summer trip abroad, a luxurious sedan (GST might make you reconsider) or get married in a pomp fashion.

Personal Financing encompasses budgetary control, saving strategies, debt management and financial goal creation. Personal Finance management gives you an insight to take better decisions with regards to investment choices. How much from the monthly income to allot towards investments, how much to put into an emergency fund to pay-off EMIs etc. – are some questions answered through personal financing. Personal financing lets you assess your daily expenses, periodic expenses and monthly debts or loan payments. This then should be compared to your monthly net income (inclusive of salary, rent, family pension, etc. You can monitor your expenses by creating a worksheet that records where you are spending your money. Personal financing ensures you pay your bills on time which saves the extra expense of penalties and late fees. Your credit history report also remains positive which helps you to get a personal loan from a digital lending platform such as Loan Singh.

Components of Personal Financing

Budget – It helps keep track of spending patterns, and you should keep aside an emergency fund.

Credit – It is a key component of personal financing because all of us need credit for either home improvement, wedding or medical expenses. It is important to clear-off the credit responsibly.

Savings – It helps you dictate your standard of living. If you have good amount of savings, you can then direct it towards investment options such as digital lending to gain returns. If you have good savings, you are also relaxed in case financial challenges crop up.

Tracking – Keeping track of financial transactions such as salary slips, card statements, ATM receipts, etc. tells you where each rupee of yours is being spent.

Roadblocks in Personal Financing

Exceeding the monthly budget – Crossing the monthly budget is very common and should be avoided. If you consistently breach your monthly budget then it’s time for you to re-plan and re-do your planning. Check what you are constantly over-spending on. See if you are reviewing the expenses based on receipts and statements.

Unexpected expenses – You cannot predict when sudden expenses may come-up. Your laptop may need repairs, the car might need some engine work, there might be a leakage in the ceiling, and sudden hospitalization of loved ones are just some examples which can throw your personal finance out of the window. Personal loan is a good option to tackle emergency expenses.


Time to Shoot Down Some Personal Financing Myths

Personal financing, after understanding its components and roadblocks, allows us to put on our myth busting hat.

Myth No.1 – Any loan is bad for our budgetary control

If you are a salaried professional, with a good repayment capacity and positive intent of clearing the loan without defaults, then a personal loan is a good option for spending towards house repairs, home improvement, etc.

Myth No.2 – Gold and real estate are the best investment options

We are driven towards physical assets. We feel they are tangible commodities that remain with us for posterity. You can invest your idle money in a digital lending platform like Loan Singh. Becoming a lender for credit worthy borrowers and earning good returns in the bargain is not a bad way to make use of your savings.

Myth No.3 – Debt consolidation is bad for credit bureau score

In debt consolidation, you apply for a single personal loan to pay-off all other smaller loans you have. This way you only have to worry about one monthly payment instead of many. Debt consolidation, if done diligently can boost your credit bureau score. This is because you close all your previous multiple loans at once thereby improving your credit bureau score. By being prompt with your repayments for the singular loan you can boost your credit bureau score even more.



Myth No.4 – Think of retirement only when you retire

As a salaried professional, focused on climbing the rungs of your career ladder, this might not be the time to think of what you would do when you retire. But doing so when you are already at that stage would be wrong.


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