Money

Make your budget balance: top tips to deal with personal loans

Understanding your debt can help you budget better

Top tip from Standard Bank: make extra payments on your instalments into your loan with the highest interest rate, to reduce total debt obligations.
Top tip from Standard Bank: make extra payments on your instalments into your loan with the highest interest rate, to reduce total debt obligations.
Image: 123RF/Andriy Popov

If you want financial security, then having a strict budget is important. A good budget helps you prioritise your spending and stay on top of your monthly expenses and loan repayments.

Setting up a budget gives you a clear idea of what’s coming in and going out of your account. More importantly, knowing your interest rate on all your loans can help you decide which loans to pay off quicker to have more control of your cash flow.

Make extra payments on your instalments into your loan with the highest interest rate, to reduce total debt obligations. For example, a loan of R10,000 over 24 months, at an interest rate of 20.5%, with a repayment amount of R642.16 will incur total interest of R2,548.34. By increasing your instalment by R100, the term reduces to 20 months and interest to R2,045.67

Top personal lending tips for budgeting:

  • Collate budgeting information: Start with how much money (your net salary) comes into your account every month. Then look at how much goes out for expenses and loan repayments.
  • Make some changes: Divide your expenses into two categories: fixed (rent or bond) and flexible (groceries). Cut out unnecessary flexible items such as buying coffee or lunch every day.
  • Be committed: Write your budget down and put it up where you’ll see it daily.
  • Check your credit bureau information: You can get one free credit bureau report a year. Make use of it to align your financial goals or before you take up another loan.
  • Regular check-ups: There are plenty of apps to help you track your budget as you spend. Your budget should remain a work in progress, which you continually adjust to suit your changing lifestyle.

To learn more about the Standard Bank loan offering, visit the website for more information.

 

This article was paid for by Standard Bank.

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