Achieving financial certainty and stability at some point can be difficult. Contemporary Polish society is characterized by changeability – it is a more frequent change of work and place of residence.
This lifestyle is also the reason that, according to the recent report (2017) ‘Social Diagnosis’, over 55% of Poles have no savings. Can this state of affairs be remedied? And can this be achieved without giving up loans?
How much money should a financial pillow have?
You can often get advice from financiers that the financial cushion should be equal to a six-month salary. So if you earn USD 3,000 a month, the financial cushion should be USD 18,000. In some cases, three months are mentioned for persons pursuing a profession desired in the labor market.
This is still a large amount and, unfortunately, impossible for many or very, very long-lasting. Collecting such an amount can be quite a challenge if you assume that monthly will save you from small savings – putting as much as 10% (which is a lot) of salary monthly would take 5 years to create an emergency fund.
How to start creating a financial stock?
A financial examination of conscience is something to start with. What is this about? It should start with determining the amount of necessary monthly expenses (rents, bills, meals, commuting) and expenses not necessary, but those that will help to maintain a good mental condition and a good mood (so-called pleasure).
On the one hand, all financial consultants are certain – saving should not mean giving up all pleasures. Then it will not be effective and will be quickly abandoned. The resulting excess, after eliminating things that you can absolutely do without, should be postponed at the beginning of the month, after receiving the salary (never at the end of the month!). You can also add other, irregular cash flows – for the sale of unused items, part of the employee bonus, additional earnings.
Saving with payday loans – is it even possible?
It would seem that these two things are mutually exclusive, and taking a payday payday is just a way of not saving money. Not always and not necessarily. Practice shows that only part of quick loans is taken to finance current expenses, and more often the reason is pleasure – the purchase of new household appliances or electronic equipment, travel, etc. Free payday loans in this case may be a good idea, and even in some situations make the motivation to save more, so you can save even more than you originally thought. Even more so if it is a free payday loan.
If possible, try to take out a loan for more than a month (check where you can get a loan for 60 days) – it will be easier to pay back without using the accumulated stock. The more that at this time free payday loans are also available. Let’s remember that a financial pillow is intended to help you stay in the event of major problems, it is not a piggy bank for whims.
What not to do under any circumstances? Do not take payday pay with the thought “I have an emergency fund, so I will pay off payday payday quota” This approach, to put it mildly, would completely miss the purpose of creating a financial cushion. Waiting for a new TV or holiday will be good only if we are sure that we will pay it back without reaching the financial reserve.
Installment loan for start – an alternative way to create a financial pillow
What if a loan does not always have to be taken out to finance sudden expenses, and just to insure against such expenses? We have already mentioned that creating a financial cushion can take several years, and sometimes longer. A sense of security can be provided by installment loans, the amount of which will not be spent, but set aside “for a rainy day.” It is worth considering this option and spending some time looking for a cheap loan: you can use the installment loan ranking or see in which company the costs will be the lowest in the article “Cheap loans”.
It is true that you will have to pay for the loan, but there are also advantages of this solution. First, a financial cushion will be created right away and ready for sudden expenses (especially important when losing your job, when low creditworthiness may not allow you to take out a loan). In addition, as we mentioned earlier – the need to regulate the monthly installment can have a positive effect on the process of saving and looking for additional sources of income – in the case of ordinary putting money away, you can often hear excuses “maybe not this month” and “nothing will happen, as I put down less” .