Posted in Finances

5 Things You Should Know Before Your First Loan

For a generation largely thought of as entitled and unprepared for the real world, Millennials, currently aged 22-36, are doing better financially than people give them credit for.
As young professionals, entrepreneurs, creatives, artists, freelancers, among many, many others, living in constant contemplation of their future, most Millennials are, in fact, so passionate about and consumed by their #lifegoals, that most, if not, all their income go to paying for their first car, getting their own place, and generally, living the best years of their lives.

Two attractive young girlfriends wearing sunglasses talking and laughing together while driving in a car through the city on a sunny day

An equal mix of angst and excitement fueled by an almost frantic desire for independence, Millennials are ready and raring to leave the nest and live their lives on their own terms. And they actually have the financial capacity to afford it. Or do they?

Short-term loans and mortgages allow young professionals—from first jobbers to senior managers—to invest in that two-bedroom condo or that first car. But remember, it’s not as simple as it seems.

If you are looking to take out your first bank, car, or home loan, better read on. Here are five things to keep in mind before you sign on the dotted line!

Work on your credit history first
If you’re planning to get a loan, take care of your credit history now. A good credit history will mean better loan offers. You won’t even have to look. Banks and financial institutions will be scrambling to give you one. How to do it? Pay your monthly bills on time and in full!

Choose your lender wisely
To avoid losing money or your collateral, go for reputable lenders like banks and other financial institutions that have good backgrounds and credentials. Their rates may be a bit high but at least you know they’re legit.

Compare rates
Don’t just choose the first bank that offers you a loan. Shop around and compare bank rates. If you do have a bank in mind, knowing the rates of other banks will give you leverage on the negotiation table.

Consider the time frame
It’s so easy to just go for a 10-year-loan or even a 15-year-loan because the monthly dues will be significantly lower. But consider, too, how you will pay for it and the interests that your loan will incur. Longer payment terms mean you will pay more. Calculate that. Try to picture where you will be in 10 or 15 years. Will you still be working and earning an income? It is best to consider these things before deciding on a payment term.

Financially protect your investment and family

Who will pay for the loan if you are suddenly not able to? In the Philippines, Millennials in the workplace do not only work for themselves but also for their families. One way to ensure that your loans won’t become a burden to your family in the future is to take out short term insurance plans for the same length of time and amount as your loan. That way, you can be confident that your unpaid loans will be taken care of, no matter what happens to you.

Try to check out pan-Asian Insurer FWD Life Philippines’ Set for Tomorrow Short Term Cover. For as low as P2,000 a month, it provides a guaranteed 100% life insurance protection against uncertainties and unforeseen life risks in 5 or 10 years—the same time period as a car or house loan. Should anything happen to you, your family will have the money to pay for the debts you left behind. It’s renewable, too, should you decide to take out another loan. And when you’re ready to invest for the long term, you can convert it to a plan that can potentially grow your money through investment funds. Now that’s the height of adulting!

Want to know more? Visit http://bit.ly/SetForTomorrowforLoans or get a quote using FWD’s Cali, http://bit.ly/AdultingSetforTomorrow

Money Management

As a homemaker, I am not just involve in chores and making my home tidy. I also do the finances and manage our money. It is not an easy task, specially if you need to balance out the expenses and the savings. Good thing there I encountered a financial blogging portal that will surely help in managing our finances.

The bulk of our expenses goes to food. I think more than 30% of our income goes to food. For a family with 4 kids, well it’s kinda expected that we spend much on food. We spend on grocery and also buy food at the wet market. From time to time, I over spend on food. I’m still trying to learn how to manage our food expenses well.

When it comes to savings, we tend to put away what is left of our money every payday. A friend said that in order to ensure savings, what you need to do is take away 10% of your income and consider it as your savings. For us, it won’t work that way (although for the past few months, our savings is more than 10% of our income), we have to prioritize the expenses (specially the bills) before we can put money to our savings account.

With the little amount we are saving, I know we soon need to invest it, so that our money will grow. And with the help of the blog I just encountered, I know investing would be much easier.

How about you my fellow homemakers, how do you manage your finances?