Inflation is real. With the current condition of our economy, trying to make ends meet of dealing with unexpected expenses can sometimes be challenging, especially if you live in metro where every move you make requires money. In such scenarios, getting short-term financial assistance, such as salary loan, can be helpful. But the pressing question remains– how will you manage your finances after a salary deduction? Let’s find out.
How to Manage Your Finances After a Salary Loan Deduction
1. Reevaluate Your Monthly Budget
When you take out a salary loan, it’s expected that your take-home pay is smaller. Reevaluate your monthly budget and try to make some changes.
List down monthly costs and prioritize factors that cannot be negotiated, such as rent, utilities, food, transportation, and other necessities.
Consider the loan repayment as fixed monthly commitment, similar to a bill and ensure you clearly state how much of your salary goes to it. This is a small step that can help you, rather than being caught off guard every paycheck.
Pro tip:
Track and organize your financial activities with a spreadsheet or budgeting program. Trust me, you’ll know how to handle your finances.
2. Identify and Trim Non-Essential Spending
We all have small luxuries we enjoy– buying your daily iced coffee, online shopping sprees; it’s like a reward for yourself for working hard. But when you’re working on a reduced income, it’s the time to acknowledge the differences between “needs” and “wants.”
Temporarily cut out spending and focus on what’s necessary. This doesn’t mean depriving yourself of the things you love doing; it’s a short-term adjustment to help you stay financially stable while paying off your salary loan.
3. Practice the 50/30/20 Rule —Modified Version
Generally, the 50/30/20 rule distributes:
- 50% of income goes to necessities.
- 30% for wants/desires.
- 20% to pay off debt or for savings.
However, it might be better to change your focus after taking out a salary loan– 60/10/30:
- 60% for necessities
- 10% for desires
- 30% for loan repayment
Adjust the percentages based on your situation and current income. Prioritizing loan payments and necessities is the most crucial.
4. Look for Additional Income Opportunities
Your budget can be more balanced if you temporarily increase your income. Consider tutoring, selling online, freelancing, or offering services that fall within your area of expertise. It’s now easier to find a side hustle that fits your schedule and lifestyle because of the wide range of options available online.
You can substantially ease your debt load or speed your loan repayment with an additional ₱2,000 to ₱5,000 per month.
5. Build a Small Emergency Fund
Although it may seem bizarre to set aside some money while repaying a loan, having a small buffer can prevent you from taking out another loan when unexpected expenses arise.
Start small. The goal is to build up an emergency fund that will protect you from future financial crises.
6. Communicate with Your Lender If Needed
If your financial situation becomes a little tighter, don’t think twice about talking to your lender. Credible lenders like Vidalia Lending Corp. could provide flexible solutions, including temporary changes, restructuring plans, or payment extensions.
Being proactive demonstrates accountability and could improve your situation with the breathing room you require without negatively affecting your credit score.
Small Steps Lead to Big Wins
Adjusting to a smaller paycheck after taking out a salary loan isn’t easy, but it’s manageable with a sensible, realistic budget and a willingness to adapt. To fulfill your needs, accomplish your goals, and be free from debt, keep in mind that budgeting is about being intentional and careful with your money.
More financial security may result from a few thoughtful adjustments made now. Focus on what you can manage, and don’t let the current limitation discourage you.
Need Help Managing Your Finances? Let’s Talk!
Living paycheck to paycheck will, sometimes, be burdensome, and sometimes you need to take an extra mile if there are unanticipated expenses. At Vidalia Lending Corp, we’ve got your back for better financial solutions.
Let us help you make every peso count. Apply now!
