The topic of saving and investing has recently been breaking popularity records. Not without significance here may be economic dissonance between those who earn far too little and those who do not complain about the amount of monthly income. Instead of waiting for a top-down solution to this problem, it is better to take matters into your own hands and take control of your own finances. For some, this will mean creating a financial cushion, while others will look through payday loans offers. Which option is better and what is a financial cushion? Let’s see!
What is a financial cushion?
A financial pillow is not a decorative element that we can put on the sofa, but a very important way to stabilize your home budget. We call money accumulated in one place for a rainy day. Thanks to it, we gain confidence that in the event of unexpected random events (job loss, illness, etc.), the world will not collapse on our heads. That is why it is often called the emergency fund – the collected capital allows it to cope with under-gate situations.
Financial experts call at the same time that we should start managing our revenues from the pillow. Only then should we try to focus on saving methods and investments. Why is this so important? The reason is very prosaic: it would be unwise to trade money without having the proverbial zloty that would help us in a crisis. And when it comes, neither of us knows.
What does the financial cushion give us?
So what does the financial pillow give us? First of all, it allows planning – not only in everyday life, but also in the professional sphere. Those planning to set up their own business without a pillow, understood here as initial capital, will not do without. Similarly, people who want to change jobs. Money set aside for a rainy day will come in handy when our earnings allow us to start investing or losing employment when we don’t have to find any source of income. The financial pillow therefore affects our sense of security, the more that it can also protect our family – it all depends on us.
Saving and investing money
Quite recently we presented a series of texts on saving methods and how to increase savings. The common denominator of these articles was the idea of being consistent and starting to save even small amounts as soon as possible, because creating a supply for a rainy day is a lengthy process. It is the same with investing, understood as buying shares, funds or purchasing precious ores. The prospect of distant profit will make us survive any turmoil in the markets and achieve satisfactory returns. However, we are sensitizing, at the same time referring to the topic of payday loans, that investing, despite having debts, completely misses the goal (saving falls out here for obvious reasons). The purpose of loans is to improve our financial situation temporarily, while investing is a way to increase your capital and secure the future.
How to start saving?
When can we start this process? First, let’s assess whether we have cash, the potential loss of which will not harm the household budget. If so, here is a list of rules and tasks. The most important thing is to create your financial pillow and then start investing, our revenues must exceed the sum of expenses. The next step is to regain control of your home budget and regularly save money. This will allow us to build both an emergency fund (up to PLN 2,000) for unexpected daily expenses and the cushion (at least 3-6 monthly costs).
The size and storage of the financial cushion
We mentioned that our pillow should be equivalent to at least half a year costs. Where does this calculation come from? In fact, it is a generalized value, because the size of the financial pillow is strictly dependent on the amount of our earnings and expenses. If we show low income and equally low maintenance costs, we don’t have to pack round sums into it. However, if these indications are high, because, for example, we have a large family, we must provide it with a properly increased security buffer. The pillow is used to finance costs that are not monthly costs – in addition, we do not know when they will appear.
To have a calm head in the event of, for example, job loss, the above calculated time for which the money should be enough for us is also the period in which we should easily find a new job. We will be calmer, because it is easier to operate without the proverbial knife in the throat, and for the most urgent fees we have where to get funds.
Where to store our capital?
A term deposit is a good solution if we split it into several smaller parts. Deposits are characterized by a lack of flexibility when withdrawing funds, usually breaking it before the deadline causes that we lose interest. If you want to have access to cash at any time, it’s better to opt for a savings account. All you have to do is set up a sub-account on your account and transfer money there every month. It is also worth following the offers of banks, because wanting to attract customers, they are attracted by a favorable interest rate.
Accumulation of money on a savings account is also a test of our strong will. Easy access to money can make us feel tempted to make internal transfers between our accounts. This way our pillow will not fill up.
How much to take a loan?
If we ask ourselves this question, it means that probably neither saving nor investing are our strength. In this case, can the payday loan be used to create a financial cushion? We answer truthfully – maybe. The problem is that building such capital (quite large, you can’t hide) with cash loans is not the best start, because in this way we will never know for sure what budget we have. Instantaneous pay will give us a false illusion of trading with more cash than we actually have. At the same time, we must admit that since we are not able to motivate ourselves to save money, the imperative of having to pay back the debt seems to be a good strategy. Of course, if we meet the repayment deadline.
If we are interested in the promotion first loan for free, let’s try to apply for an amount of up to PLN 2500 – 3000 for 30 days, assuming that our income will bear such a burden. Larger amounts will be too risky, smaller ones will not give us a full picture of the situation. We will quickly find out whether this method of putting money into the financial pillow seems to work with us. We will not incur any additional costs, as the first loans, mostly parabanks, are free. However, we should remember that in the event of a random event, we will not only have to pay the payday payday bill, but also deal with current expenses. In other circumstances, without a loan and a financial cushion created, we would use its resources to save ourselves from oppression. A cash loan is therefore a sure way to build capital, but, in the long run, it will not secure our future and will not make us sort the household budget.
If you are interested in an online loan, below are some offers selected by our specialists. To complete the formalities, simply click “Submit Application” and complete the form available on the lender’s website.
Building a financial pillow by young people
Students can enter adult life with a certain amount of cash, and interestingly, student loans can help them. Money borrowed in this way has a very low interest rate and the debt repayment period is spread many years after the end of his career at the university. Student loans do not have to be issued at all (unless of course we do not need them) for current expenses, but can be a good investment and make it easier to enter adult life.