SAN CARLOS, CA / ACCESSWIRE / January 18, 2024 / Navigating personal finances may seem daunting for beginners. With so many different aspects to consider, from debt management to savings, it can be difficult to know where to start. Oportun, a mission-driven fintech focused on financial health, offers the knowledge and tools to help get on the path to a sound financial future. Here are four personal finance tips every beginner should know, from getting a personal loan to reaching savings goals.
Get a personal loan to cover essential and emergency expenses
Personal loans can help people access funds to cover personal needs, such emergency and essential costs, like home repairs, groceries, and car maintenance. Borrowers can also use personal loans for debt consolidation, allowing them to pay off multiple debts with one payment and potentially save money on interest.
These loans are particularly useful to someone looking for cash up front and time to repay the loan, in contrast to a credit card, which responsibly should be paid off the next month. Oportun's personal loans allow borrowers to split expenses into manageable payments over a fixed period. Though the overall cost will increase due to interest payments, the enhanced affordability may be worth it.
A personal loan can be secured or unsecured, meaning the loan is either backed by collateral or not. Typically, secured loans can be larger or come with a lower APR. At Oportun, secured personal loans range from $2,525 to $18,500 and are backed by a car title. Unsecured personal loans range from $300 to $10,000. Both options are great for people who need access to funds quickly, though the secured option is currently only available in a limited number of states.
Use debt wisely to strengthen your finances and avoid a cycle of debt
Debt can be used to advance financial health or destroy it. Debt can be considered "good" when it is used strategically to improve one's well-being, position in life, or to grow wealth at a faster rate than the debt costs. Some examples of good debt include investing in education, real estate, a car, or business. Other examples may be less obvious. Debt consolidation can help a person gain control when debt has gone out of hand. Covering an emergency can relieve the added stress of figuring out how to pay for it. Bridging a temporary gap between income and expenses can keep food on the table or lights on overhead.
Debt is "bad" when it becomes difficult or extremely expensive to repay. Spending more than one earns, or using credit products irresponsibly are two ways to get into a cycle of debt. Two tips: 1) Never use credit to buy non-essential items without a solid plan on how to pay for it. 2) Only use credit products with a deep understanding of repayment terms and a commitment to repayment.
Credit cards are a useful financial tool, though credit card debt is notorious for getting out of hand. To use one wisely, pay off the balance each month. People who make only the minimum payment are more likely to have a difficult time paying off the debt in the future. Payday loans are also known for creating a cycle of debt, caused by the short repayment period and the ease of getting new payday loans. Do not take out a payday loan unless it can be repaid in full when it's due, typically two weeks later.
Oportun's personal loans are designed to help borrowers grow in their financial journey. To aid with budgeting, repayment terms are fixed in payment size, schedule, and APR. There are no balloon payments. Nor are there prepayment penalties, so borrowers can save in interest by paying extra or off early.
Before taking on any debt, it's advisable to assess your financial situation, create a solid repayment plan, and consider seeking advice from financial professionals.
Start an emergency fund
Emergencies can happen without warning, so it's essential for financial wellness to begin preparing as early as possible. General guidance is to have an emergency fund that can cover three to six months' worth of living expenses. Getting started and continuing contributions until that goal is reached can be a huge challenge, especially when budgets are already tight.
Oportun's savings app offers a solution so smart it was rated number 1 by both Bankrate and badcredit.org in 2023. The app connects to a user's bank account and monitors spending and income daily to intelligently pull cash into a savings account when the user can most afford it. Further, the amount pulled out varies depending on how much the user can afford in that particular moment. Getting started is simple: Download the app and connect a bank account. Keeping contributions going is effortless: Just let it run. Overtime, savings will add up to reach that emergency fund goal.
Set goals and work toward them
Creating a budget can assist with managing finances and building savings. Start by tracking everyday expenses to determine average monthly spending and income. From there, categorize expenses and how much to contribute to each category. This can help avoid overspending and ensure some money goes toward monthly savings.
But a budget isn't the only way to reach your goals. Oportun's savings app, which automatically monitors income and expenses, can also help build savings for goals big and small. Set goals, like purchasing a home or concert tickets, and watch as they become closer and closer to reality.
The bottom line
Personal finance doesn't have to be stressful. These tips and tools can allow beginners to take the first steps toward financial stability. Remember, making small changes today can lead to significant benefits in the future such as better control of their finances and progress on their journey toward financial success.
CONTACT:
Sonakshi Murze
Manager
sonakshi.murze@iquanti.com
SOURCE: Oportun
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