Financial habits of consumers are one big reason why they fall on hardship

Bad financial habits may be one big reason why some are struggling to manage their finances

Many of us will suffer financial hardship or difficulty at one stage or another in our lives. Whether it’s overuse of credit, too many bills arriving at once, ill-health, losing a job, or an unusual turn of events, the reality is a financial crisis can happen to anyone.

Research into the financial habits of consumers, found that a large number of consumers are in financial hardship or difficulty, and are struggling to manage their finances:

• one in five, 20% admit to having no particular budgeting strategy;
• one in four, 28%, say they make impulse purchases outside their normal budget;
• one in five, 22%, make a large number of shopping trips that cost more than intended;
• one in eleven, 9%, have no money set aside if several bills were to arrive at once, and would need to strike up a payment plan with one or more of the companies concerned to pay off the debt; and
• one in six, 17%, are forced to spend on unexpected bills during any given month eg. motor vehicle repairs, breakages and urgent replacement of household goods.

These sorts of financial hardship or money problems are spread throughout the community. Financial hardship are found in all types of households, irrespective of people’s age, sex, marital status, occupation or income. It’s not just a problem for the unemployed!

A large proportion of us are simply unprepared to handle a financial crisis. Some don’t have the skills to manage their money prudently. Others ignore the warning signs and fall into a debt trap. Whatever the causes, the consequences can be devastating.

This section helps you to deal with a financial crisis. It provides practical information to enable you to take control of your finances and be better prepared for the financial hardship. It also contains information on who you can turn to for help in sorting out your money problems.

As many people say, prevention is better than the cure. If you are already finding it difficult to cope with day to day financial pressures, and are facing financial hardship or difficulty, you should consult a Financial Counsellor who is trained to help you resolve current money problems and put you back in control of your finances.

10 steps that you can take to avoid falling into bad financial habits include:

• Draw up a budget – which has savings goals and spending priorities – and stick to it. Have an emergency fund equal to three months income
• Avoid impulse purchases and frequent trips to the shops – put things on lay-by if you must have them
• Use your own money to pay for goods and services as much as possible e.g. cheques or debit cards are convenient ways of accessing your funds
• Pay the balance on your credit card balance off each month especially after New year
• If you regularly carry a credit card balance over from one month to the next, make sure the interest rate on the card is reasonable
• Reduce the number of credit cards you have
• If your pay is deposited electronically into your bank account, ask to pay your loan automatically via GIRO
• If you have several loans including lots of credit card debt, consider consolidating the loan balances into one personal loan – this will give you the opportunity to clear the debt, with one set of repayments, over a fixed period of time. Learn more about our Personal Loans.
• If you are experiencing problems, talk to your creditors straight away. You may feel awkward and embarrassed, but it is important to let your creditors know what is happening. Most creditors will be pleased you have called to inform them about the situation. When they haven’t heard from you, they will think the worst. Avoiding creditors only puts them off side. Before you talk to them, sit down and work out what you are going to say. Take the time to think about what money you have coming in and what money you are spending. Prepare a money plan so you can make an offer to your creditors that is realistic and within your means.

If you are in financial hardship and traditional banks are not willing to give you a reasonable personal loan, talk with a credit counsellor to and they may give you good advise on financial habits. Although some lenders are more willing to lend for short term and have special programs designed for members who need cash fast, we must be wary of quick fixes.

If you choose a loan from a non-traditional loan source, loan amounts range up to $2,000. Depending on your financial circumstances and the lender, it may be possible to borrow more through a secured or unsecured short-term loan, sometimes with amounts of up to $10,000 available.

As these loans usually involve borrowing a small amount for a short period, many lenders offer quick and easy applications. Some lenders can also provide instant loan approval and transfer the funds into your bank account within one business day. You typically have between 2 days and 1 year to pay back the money you borrow.

How to Secure Personal Loans Quickly

If you are in a financial crunch and are searching for personal loans, good loan consultants can set you up on a path that can get you a it in a quick and seamless manner. Good loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. You should also find out about money saving tips.