Tag Archives: loans

Fresh Calls for Tighter Lender Regulation as Credit Costs Rise

UK borrowers are paying way more than expected for personal loans as the difference between the actual and advertised rates rises. Leading lenders in the UK are currently advertising fixed rates on typical loans at 2.8 to 4.9%, but in reality, borrowers are paying an average APR of 7.3%. This translates to approximately £204 million more every year according to the Centre for Economic & Business Research (CEBR) which discovered that these representative rates have been unrepresentative for years (since 2011).

Critics of this practice have boosted their calls for tighter legislation over marketing using these misleading rates after a survey discovered over 80% of applicants trust the advertised rate. According to current rules, at least 51% of borrowers must be offered a rate for it to be advertised. Considering personal borrowing amounts to more than £209 billion (compared to £196 billion same time last year), UK borrowers are feeling increasingly dissatisfied, mislead and confused according to industry commentators.

Shawbrook Bank, which co-authored the report, warns that this lack of transparency makes it impossible for borrowers to make informed decisions on affordability from the onset of the loan application process. Lack of transparency has in fact contributed to many people taking larger loans than they would otherwise take if they knew the actual rate initially.

In fact, this tendency can be linked to increased cases of defaults according to the CEBR research. Since the first quarter of 2016, lenders have recorded a rise in default rates for unsecured consumer loans in a record 8 out of the last 9 quarters. This clearly shows the importance of giving borrowers accurate information before they apply for loans. The research has come out immediately after the regulator reviewed the UK’s high-cost credit market last week.

There are millions of Britons depending on doorstep lenders, overdrafts, payday loans, catalogues, hire-purchase as well as rent-to-own agreements among many other forms of short-term loans in the UK. The FCA is expected to take tough action on lenders found culpable of misleading borrowers and charging high interest rates on a variety of financial products including overdrafts used by approximately 19 million Britons.

The proposals which include capping the total cost of hire purchase products and banning overdraft fees will be subject to consultation for some time. If implemented, the proposals could save UK consumers approximately £200 million every year.

According to Rachel Springall, a finance specialist at moneyfacts.co.uk, the FCA’s proposals to deal with lenders overcharging customers for loan products like overdrafts is welcome since the move would see borrowers enjoy savings amounting to £140 million per year.

Springall acknowledges that many banks have adjusted overdraft structures over the years by abolishing interest charges and introducing flat fees. Although the move has made it easier for customers to calculate charges, flat fees have turned out to be more expensive than interest on an overdrawn balance. The average usage fee for arranged overdrafts has increased to £6.75 (from £4.69) five years ago.

For instance, customers who had overdrawn £300 for two weeks on a Santander Everyday current account would have to pay £14 as charges (£1 every day). However, the same customer with a first direct 1st account would pay £0.33 only in fees based on a 15.9% EAR.

According to Springall, the complex process of comparing deals tends to put some customers off making it hard to make overdraft fees fairer. So, customers who feel they are getting bad deals should shop around for the best short-term loan deals without forgetting about their long-term borrowing needs.

However, some critics argue that the FCA needs to do much more considering StepChange Debt Charity statistics show a record 1.4 million British households used high-cost credit to pay for essential goods last year.

According to the head of Which? Money, Gareth Shaw, unarranged overdraft charges tend to spiral up to seven times more in charges compared to payday loans making it wrong for the regulator to continue delaying action.

Shaw continues to stress on the fact that the FCA expressed concerns on the way overdrafts work last summer but is yet to take action one year later. Shaw states that the government must intervene to make sure unarranged overdraft fees are matched with fees charged on arranged overdrafts. This should take place since many people are suffering because of these rip-off fees yet the FCA continues to delay action.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

What Happens to Credit Card Debt and Other Debt When You Die?

Are your credit card debts cancelled when you die or do they become the responsibility of your loved ones? This is a very important question, yet many credit card holders don’t know the answer. Here’s what you need to know.

According to Andrew Shaw, StepChange Debt Charity’s debt advice policy coordinator, the rules vary depending on a number of factors.

If you live in England and Wales, for instance, your debts can “die” with you in some cases. Sometimes creditors can write off debt belonging to deceased individuals or simply stop pursuing such debt; however, aren’t obligated by law to do so.

Also, some alternatives may be addressed in insurance policies. For instance, if the deceased has a policy that covers outstanding debt if they die, such policies can take care of credit card debt among any other debt the policyholder may have.

It’s also a matter of the type of debt. If the credit card debt has joint names, the responsibility of paying the debt is automatically passed on to the other person i.e., surviving account holder. However, most credit cards are issued for individual names.

Outstanding debt owned by a person when they die can also be repaid using proceeds of their estate. This is usually done in a probate process. If the money isn’t enough to repay the debt/s or the deceased estate is insolvent, a trustee is usually appointed to share the proceeds fairly among all creditors.

A creditor or representative of the deceased can get an insolvency administration order. In case the deceased has jointly owned property, proceeds of the property are shared depending on the nature of the joint ownership. If all parties had equal ownership, the property is transferred to the surviving owner and creditors can’t force a sale. However, the surviving person can be obligated to pay an amount equal to the deceased person’s shares if there is an insolvency administration order.

Creditors can force a sale to recover their money if the joint owners owned separate shares i.e. tenants in common. The shares of the deceased are treated as their estate in such a case.

If you think your home is at risk because of debt accumulated by a deceased joint owner, seek legal advice immediately. After the estate is dealt with, relatives of the deceased are not responsible for any outstanding debt.

Emma Gunn’s take

According to Emma Gunn of ThisisMoney.co.uk, family members should take some steps when a loved one passes on to avoid confusion with lenders as well as help settle any liable outstanding debt smoothly.

You’ve probably heard of companies or creditors who keep sending bills to deceased persons or fail to terminate accounts and then charge deceased persons late fees/penalties. Some creditors go as far as harassing loved ones.

To avoid such problems, it’s important for outstanding debt or credit contracts of loved ones to be listed. Contacts of banks/lenders should also be known in advance. Doing this is important when it comes to managing mortgage debt, credit card debt and student loans among other debt after the death of a loved one. The information should extend to insurance, savings and pension information to ensure there are no late fees among other charges added to existing debt or bills.

In most cases, you need documentation such as a death certificate to stop charges/fees, so it’s important to take extra copies when you register the death. You should also record when you contact creditors/banks, who you spoke with and file any correspondence in case there is a dispute in the future.

Remember to include utility companies in the list from mobile phone contracts to energy bills. Some utility companies don’t cancel contracts, but it’s worth asking. There may be an outstanding balance or due payments that can be deducted from the estate.

As mentioned above, the rules change for joint bank accounts among other joint credit accounts like mortgages or loans. Your partner may/may not be held jointly liable when you die.

The debt may be split, or he/she may be wholly liable. The key is; contacting creditors immediately. If you are struggling with payments, let the creditors know. Most will be willing to create a new repayment plan or offer repayment holidays.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Quick Guide to Debt Management Plans (DMPs)

What is a Debt Management Plan (DMP)?

A debt management plan or DMP is simply; a plan or program meant to help you repay your debts comfortably. DMPs are recommendable for people with non- priority debts such as store card debt, credit card debt, overdrafts or personal loans. Debt management plans are usually prepared by debt management companies. Your DMP provider will work with you and your creditors to come up with the most affordable debt repayment schedule for you that is agreeable to your creditors. A typical DMP will involve a borrower making one payment monthly to their DMP provider who in turn, pays creditors as per the agreed plan. Typical DMPs run for 3 to 5 years. They are part of debt consolidation plans designed to help individuals in debt regain control of their debt/finances while decreasing unsecured debt.

Types of debt that can be paid off using a debt management plan

Debt management plans are ideal for non-priority debt which includes; personal loans, overdrafts, building society loans, bank loans, money borrowed from family/friends, payday loans, credit card loans, store card debt, home credit, and catalogue or in-store credit debt.

Examples of debt that CAN’T be repaid of using a DMP include; council tax, court fines, utility bills (electricity and gas bills), child support, TV license, high purchase agreements, National insurance, income tax, VAT, rent, mortgage and any other loans secured using your home. Basically, all kinds of priority debt can’t be settled with a DMP.

Getting a debt management plan

Getting a DMP is easy. Many debt advice organisations in the UK offering free advice can help you get a debt management plan. Free debt advisers offer expert debt advice to many people in the UK every year. They are among the best-suited organisations to go to for advice when you find yourself in financial problems.

Before you choose a specific debt management provider in the UK, it is worth noting that all reputable providers have FCA authorisation. You can check for authorisation on the official FCA Financial services register. [1] This is particularly important when dealing with fee-paying providers.

Once you have identified a suitable provider, the next step is agreeing on a suitable monthly budget. This step is important for determining the amount of money you can afford repaying comfortably. After setting a budget, your provider will go ahead and negotiate with your creditors on new repayment terms. A good provider will be able to secure a good DMP that is agreeable to all parties. Most creditors don’t have a problem with people who owe them money as long as you show gestures of goodwill.

Important considerations

A debt management plan will help you take charge of your finances again. However, it doesn’t guarantee you “peace of mind”. Some creditors may still contact you. Also, as mentioned above, DMPs are available for non-priority debt only. It’s also worth noting that DMPs may affect your credit history.

What’s more; creditors are not obligated to accept DMPs. Creditors may also continue adding charges and interest which can increase the total debt repayment amount. A good provider should be able to negotiate great terms that offer safeguards against such practices. Lastly, it’s good to recognise the fact that DMPs may extend the amount of time it takes to repay your debts. Debt repayment methods such as contractual payments are faster.

Main advantages of DMPs

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Although DMPs attract some cons, they have notable advantages. One, you get debt consolidation without taking on additional loans. A DMP will also make you more organised with your finances. You could also improve your credit score and credit report over time. Last but not least, you stand to enjoy some reprieve from creditors or debt collectors because they have an incentive to stop pursuing you.

Why do you need a DMP?

You can choose to repay your debt on your own; however, this isn’t a good idea if you are in debt in the first place. Instead, you should focus on finding professional help externally. People who let debt overwhelm them before they can seek help face serious financial problems. For instance, no one may be willing to lend you by the time you decide to seek help. Your finances may also spiral out of control. Furthermore, taking long to seek help extends the amount of time you need to become debt-free. You can also get free debt advice in the UK!

Reference

[1] https://register.fca.org.uk/

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Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

No. of UK Pensioners Seeking Payday Loans Has Risen by 200% in 2 Years

According to the latest statistics from payday loan company CashLady, 1.4 million Britons have joined the poorest 10% in Britain. The new shocking figures indicate a 95.2% increase (since 2015) in the number of Britons aged 65 years and above relying on loans to boost their monthly pension.

Hard-up pensioners have increased their borrowing by £157 (from; £1,478 to £1,635). The latest statistics show that this age group is now borrowing approximately £400 in payday loans (now dubbed Grey Day Loans) monthly to survive.

For the first time in Britain, charities have warned of the disproportionate number of seniors seeking financial aid for subsistence purposes. A record 1.4 million pensioners have joined the poorest 10% in Britain. Only 1 million pensioners were part of this statistic in 2015.

The statistics indicate a 26% rise in the number of loans requested despite a 10% increase in monthly income for pensioners. This shows that the average pensioner is struggling to cope with the increasing cost of living. In just two years (2015 to 2017), the average loan amount requested has risen from £302 to £382.

According to the MD of CashLady Chris Hackett, the figures show there is an increasing number of seniors struggling to get by solely on their pension. According to Hackett, inflation levels are primarily to blame. Inflation has reached a historic high. Although pensions have increased, there is still a growing shortfall between the cost of living and pension income.

Personal Finance Society statistics

This new data follows a recent report released by the Personal Finance Society showing that the poorest pensioners receive 75% of their pension income from the state pension. The Personal Finance Society report shows that millions of seniors in Britain are about to become entirely reliant on the £7,000 per year basic state pension for survival. Numerous charities have come forward urging the UK government to do more to support the elderly who are struggling.

Charities’ take

According to Caroline Abrahams, Age UK Charity Director, the UK is at risk of assuming all elderly persons are living comfortably when that isn’t the case. The recent pensioner poverty statistics clearly show that elderly pensioners are at risk once again.

According to Abrahams, surviving in Britain on a low income/wages is hard enough for individuals in any age bracket but extremely stressful for older persons, especially those living on their own and struggling buy food and pay utility bills.

Abrahams believes the State Pension is more important now, more than ever as a tool for fighting against pensioner poverty. She is however of the thought that there is more help for those in dire need. For instance, elderly pensioners can claim benefits they are entitled to. This can make a great difference according to Abrahams given the fact that a record £3.8 billion in benefits goes unclaimed by elderly people every year in Britain. Before seeking alternative income such as taking out payday loans to pay for utility bills or buy essential goods and services, elderly pensioners are advised to exhaust their cash benefits.

Age UK is one of UK’s top charities which helps elderly pensioners get unclaimed benefits. Before pensioners become so desperate to the extent of seeking help to pay for essentials and insolvency costs, they should consider contacting charities like Age UK.

Turn2Us is another charity that offers similar help. The national organisation helps the needy/poor access charitable grants and welfare benefits among other types of financial help. A statement from Turn2Us shows that there is an increasing number of female pensioners seeking Turn2Us’ help.

Many pensioners in the UK don’t get the government assistance they are entitled to like Winter Fuel Payment and Pension Credit. This is because many people have been able to live all their lives without needing these benefits before so they only naturally consider credit which is readily available whenever they need help.

In an interview with The Mirror, Pritie Billimoria, Head of Communications at Turn2Us stated that; most people who have been comfortable most of their lives risk being financially week after retirement. According to Billimoria, struggling financially when you are older can be very distressing which is why elderly pensioners need all the support they are entitled to.

Age UK offers FREE financial advice and help to elderly persons with financial problems. Contact 0800 169 6565. Website: www.ageuk.org.uk.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Personal Lending in the UK Rises Four Times Faster Than Wages

According to the latest BBC News research, the total value of pending personal loans in the UK has increased four times faster than income/wages. The current value of outstanding loans stood at £37 billion in the financial year 2016-2017 according to recent UK Finance data.

The CAP (Christians Against Poverty) attests this fact by saying that January 2018 was the busiest month ever for individuals seeking debt advice. This is despite the fact that the FCA claims a majority of the loans taken in the recent past went to individuals who could afford to repay.

UK Finance statistics

UK Finance covers 10 of the largest building societies and banks in the UK. Their statistics indicate a 25% since in the value of outstanding loans since 2013-2014. However, wages have grown by just 6.5% over the same period according to data from the ONS (Office for National Statistics). UK households accumulated a record £37 billion in outstanding personal loans in 2017 alone which represents a £7 billion increase from 2014.

In Northern Ireland alone, outstanding personal loan debt stands at approximately £1 billion. Most British households say they have been forced to borrow loans because of the rising cost of living yet wages have stagnated.

UK households are borrowing to survive

According to a recent BBC News interview, Mel Reynolds, a Batley, West Yorkshire resident and mother of two says ”I borrow money to pay for food.” According to Reynolds, her salary is only able to cater for her mortgage and utility bills. The situation has been so bad for Reynolds she has had to choose between fueling her car and feeding her two boys. This is despite the fact that Ms. Reynolds works full time. She has accumulated approximately £28,000 in debt through bank and credit card loans from 2007 to 2015.

The CAP which has been helping Ms. Reynolds says January was the busiest month ever for individuals seeking help with their loan/debt problems. The CAP was started in 1996.

According to Daniel Kelly, the Creditor Engagement Manager at the charity, there are an estimated 8 million people in the UK worrying on a day-to-day basis how they will pay their bills. What’s more is; January 2018 was the busiest year ever for the CAP debt call centre.

The outstanding loan problem could be bigger given that the latest data from the UK Finance covers personal loans issued by building societies and banks only. Credit card loans, student loans, and payday loans have been excluded from the latest UK Finance data.

BBC England analysis

BBC England’s Data Unit has dived deeper to offer a more in-depth analysis of the debt problem in the UK. For instance, BBC England Data Unit reveals that the current outstanding personal loan debt translates to £1,384 per UK household in 2016-2017. The data analysis also reveals that the debt problem is most prevalent in areas which have experienced the lowest increase in average pay among full-time workers. BBC England data analysis also reveals that St Albans is the worst hit with an unsecured lending increase of 43%.

It gets worse. UK households have over £1.5 trillion in mortgage debt which could pose serious economic risks in case of a sharp increase in personal loan debt.

Welfare organisations’ take

Many welfare organizations in the UK have expressed concerns about the possibility of many people ever being unable to repay their outstanding debt. One such organization is Leeds-based charity, Money Buddies. According to Sylvia Simpson from Money Buddies, the charity has many clients who have confessed to struggling with debt but still willing to take more debt if banks are willing to lend more. This highlights why the FCA has intensified its efforts to crack down on irresponsible lenders.

The FCA’s take

According to Chris Woolard, the Director of Strategy & Competition at the FCA, the current personal debt levels have hit the long-term average triggering a concern for vulnerable borrowers who could be exploited further by high-cost lenders. Woolard, however, states that most lenders are following the rules. The FCA is also taking stringent action when lending rules are broken.

The UK Finance is also committed to responsible lending. This is according to sentiments expressed by one of the association’s spokespersons. ”UK Finance undertakes thorough risk assessment before approving credit applications. The association also advises struggling customers to talk to their lenders immediately.” The association also goes further and states that majority of its borrowers are able to meet their loan repayment obligations without problems.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Banks Issuing Debt at Fastest Rate in 8 Years While Household Debts Soars

According to the latest Bank of England data, net new issuance of commercial paper and bonds stood at £17.5 billion in November 2017. This statistic shows that November 2017 was the busiest month for UK businesses and banks since October 2009.

Debt markets have been growing at the fastest rate in eight years, and what’s more, bankers expect the trend to continue in 2018. From January to November 2017, UK businesses and banks raised a net £50 billion which was the yearly level since September 2010.

According to Davis Marks, a debt capital banker at JPMorgan, UK banks are expected to be more active in capital markets this year (2018) than they were in 2017. UK banks must, however, refinance existing debt as well as build additional capital to meet the 2022 regulatory requirement deadline.

Labour analysts have been on record warning over rising household debt. According to John McDonnell, the level of unsecured borrowing in Britain may hit record levels very soon. According to remarks he made in December 2017, McDonnell stresses a need for more decisive action from the government in 2018 regarding debt since the UK has already seen a debt crisis with payday loans where payday loan companies were making astronomical profits from people’s financial problems.

Analysts have predicted that the level of unsecured loans per household in the UK will exceed £15,000 in 2018 and could easily surpass £19,000 by 2022 if adequate action isn’t taken.

Million of Britons starting 2018 in debt

The latest National Debtline statistics indicate that 7.9 million Britons are likely to start 2018 with debt accumulated during the Christmas season. The debt advice charity estimates a record 16% of Britons will face difficulties meeting their financial obligations in January 2018 compared to 11% last year. This statistics clearly shows that people will be worse off this year than last year, but all is not lost.

The FCA has new rules in place that require UK lenders to prompt borrowers to repay debt faster. Lenders are also obligated to intervene early in cases of repayment difficulties. For instance, they can cancel interest and/or waive charges accumulated on short-term debt like credit card loans for customers who are in debt persistently.

Quick measures/steps to get out of debt in 2018

In case you are already in debt in January 2018, there are some measures you can take by yourself to repay the debt before more is done by the government and regulators to deal with the increasing rate of household debt. It doesn’t really matter if you took out a short term loan such as a payday loan that you didn’t need. It’s time to take action.

Step 1: List all your debt

If you have more than one loan to repay, you should start by listing all your debt. It may appear obvious; however, most people who take many short-term loans don’t know how many loans they service in a month among other important details such as interest amount and additional fees. A simple exercise such as listing current loans can help you assess affordability accurately preventing you from taking up more loans.

Step 2: Repay the most costly loans first

Step 1 should help you identify expensive debt. Repay such debt first to reduce the total time you take repaying especially if you make more than minimum repayments. Observing this step will also help you reduce the total charges incurred.

Step 3: Halt savings/investments for a while

It’s always prudent to save and invest after getting rid of debt especially if it is short-term debt which accumulates hefty charges in fees and interest. Instead of saving and investing every month, as usual, use the money to offset your debt. However, don’t forget to continue saving/investing once you are debt-free.

Step 4: Consider debt management strategies

If you accumulated a lot of debt during the festive season that may not be repayable easily/faster/comfortably using your monthly savings, you can consider consolidating the debt which is simply; combining many debts into one manageable debt. Many lenders offer this option. You can also visit a financial professional to advise you accordingly given debt consolidation has some risks that must be understood beforehand to avoid more debt problems.

Lastly, don’t get into debt again. If you must take a payday loan or any other type of short term loan, use the loan amount for the intended purposes. Loans should never be misused. Never take loans simply because they are available. You should also take a loan you can afford comfortably.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

4 Money Lessons You Must Teach Your Kids

We all have money regrets. You’ve probably made a financial decision you regret to date. It could be anything really from a missed investment opportunity to bad spending habits. Such decisions may have had a major implication on your life to the extent you wish you had known better and wouldn’t imagine your kids repeating those mistakes. Given the importance of financial literacy in life and the fact that schools don’t teach kids about money, it’s your duty as a parent to pass this important knowledge. In case you are wondering which money lessons are the most important for your kid, you are in the right place.

Here are four money lessons you must teach your kids.

1. Saving is cool, It takes money to make money!

Your kids must understand this first for them to know the importance of saving. You can start by getting your kids piggy banks, if you haven’t already, to encourage them to become avid savers. You can also incentivize saving using monetary rewards when your kids reach certain milestones. You should encourage your kid to save pocket money as well as monetary gifts they get from relatives. Saving is a crucial money lesson that should be taught from an early age since you need to accumulate money to invest if you don’t want to take out loans. Furthermore, you need assets to secure loans so you must have some savings first to start your financial journey.

2. You need to wait sometimes to buy what you want

This is a difficult money lesson for most kids, yet it is one of the most important for financial success. A person’s ability to delay gratification plays a crucial role in their future success. Kids who are able to resist from buying things or asking for things they want immediately have an easier time succeeding financially given most important money lessons like saving are a form of delayed gratification. Most parents have a problem teaching this lesson because they want the best for their kids. Parents love giving their children things they desire like toys and gadgets. However, you should make your kid wait sometimes before they get what they want. This lesson will encourage your kid to manage their money better when they grow older. It will also help them appreciate the fact that money is scarce and you need to make smart choices like waiting before you spend.

3. Income counts

Your kids also need to appreciate the importance of having an income. To teach this lesson effectively, encourage your kids to earn income doing jobs like; selling lemonade, pet walking and raking leaves. Making your kids work for money is important because it teaches a valuable lesson money’s scarcity. When you teach this lesson effectively, it will be easier to teach other lessons like savings and spending money wisely since your kids will already appreciate the effort it takes to get money. Unless you are already wealthy and planning to leave your kids a fortune, it’s crucial for them to understand it takes a job to earn money.

4. Sharing is good

Kids should also learn to share from a young age. They should learn that money isn’t just for fulfilling one’s needs but also helping people who are in need. This money lesson is important for teaching responsibility and compassion for others. It’s also important for eliminating bad habits like materialism and selfishness. It’s unfortunate that kids don’t learn much about money in school yet it is a very crucial subject. Teaching your kids the above money lessons is a great way to prepare them for future success. The above lessons equip kids with important traits like self-control which are crucial for financial success in the future. Kids who learn how to save, earn and delay gratification at an early age are less likely to get into financial problems in the future according to numerous research studies. One such study done by researchers led by psychologist Terrie Moffitt from Duke University links self-control with debt problems. According to the study (which tracked 1000 kids in New Zealand from birth to 32 years), kids who had high self-control are more likely to succeed in life. In a nutshell, instilling financial self-control using the above lessons will help your kid avoid financial problems like debt in the future.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Financial Planning Tips For You and Your Family

Most couples face serious challenges when it comes to dealing with finances. In fact, many research studies have shown that finances are among the top reasons why couples argue. It gets more challenging when children get into the picture. Couples argue over how to spend money, how to save, invest, share bills, etc. This is usually the case since most marital decisions revolve around money. For instance, you need to consider your finances as a family when deciding where to live, the type of car/s to buy, where to take your children to school, whether you should take a loan, etc.

Furthermore, most people are uncomfortable discussing finances even with their spouses, yet it’s one of the most crucial subjects for couples keen on staying together in peace. This is why family finance is so important. To be able to avoid most family problems, here are the most important family finance tips to consider.

1. Develop mutual finance goals:

This is by far one of the most important family finance tips to consider. As a couple, you must develop finance goals that are acceptable to both of you and your family as a whole otherwise you will end up having endless arguments about money. You must agree from the onset who does what as well as what you intend to do with your money to avoid avenues for arguments. In a nutshell, family finance goals should be developed and accomplished jointly. The finance roles of each spouse should be clear from the onset.

2. Maintain 100% honesty:

This goes without saying. You should be 100% honest with your spouse on every issue including finances from the onset. Most spouses argue about money because they feel shortchanged. This is why it’s advisable to be open about how much money you earn so that your spouse doesn’t have unreasonable expectations about what you can afford to contribute. You should also be open about the loans you have, your credit history, credit cards, etc. from the onset since such things have an effect on your access to credit as a couple/family.

3. Have a budget and follow it:

To avoid overspending and running out of money, you must prepare a family budget and follow it. Running out of money prematurely always causes a lot of tension in families. Preparing a family budget will help to keep your spending in check. You will be able to avoid living beyond your means. You will also be able to know exactly where your money goes which will in turn help in cutting down on expenses if you need to. It doesn’t matter how much money you and your spouse earn. If you don’t have a budget, you won’t be able to move forward financially.

4. Consult each other when making “major” purchases:

Since everyone has different ideas on how they should spend their own money and you seize having your own money when you start a family, it’s important to consult especially on major purchases like cars, homes, expensive jewellery, etc. Consulting your spouse is important because it makes them feel valued as an equal partner in the marriage. Furthermore, there may be a better way to spend the money in question, and you wouldn’t know this if you don’t consult. Furthermore, you would want to be consulted by your spouse when he/she is making a major purchase so, do the same.

5. Set financial goals:

Budgeting isn’t enough since it focuses on how you should spend whatever you make. You need to think of growing your income as a couple so that you can afford the things you want in the future. Financial goals are critical for growth. They help couples avoid the stress associated with being stuck in the same social class for years. If you set solid investment goals now, you should be able to afford a house or new car in the future which eliminates financial stress in the future.

6. Review your financial progress periodically:

Having a budget and following it isn’t enough. You need to review your financial progress often to ensure you are on track. Furthermore, money discussions shouldn’t be confined to budgeting. You should also review the progress of your long-term financial goals. For instance, you should discuss progress on your savings and investment accounts. Reviewing your finances periodically helps to identify and solve potential problems. It also helps families focus on achieving their goals.

Summary

Most family problems revolve around finances. Most couples argue because of lack of enough money, misappropriation of money, dishonesty when dealing with money, name it! The above information highlights the basics of family finance every family should follow to avoid common family finance problems.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.