So what exactly is consumer finance? Let’s explain away the jargon!

Loans 2 Go offer a range of personal loans to sort out your finances

Have you ever had one of those moments when you realise that there is something you have understood wrongly for years?   You suddenly hear someone explaining something and what they’re saying makes sense – but is totally different from what you had always thought.   What a relief you didn’t get found out!

Such moments are not surprising, given the ever-increasing amount of information that we are exposed to on a daily basis.  Nor is it just information: these days there is so much jargon around that it can be difficult to keep up, yet we are often afraid or embarrassed to ask questions in case people think we are ignorant.

Take the area of consumer finance.  What exactly is it?  Let’s explain away the jargon!

Consumer finance is basically any aspect of managing money that is relevant to either individuals or households.  There are three main parties involved in the world of consumer finances: you (the consumer), financial institutions (such as banks), and the economy as a whole (because this can impact on the money in your pocket).

From the point of view of the individual consumer – i.e. you – consumer finance covers four main areas:

  1. Budgeting – how to use your money
  2. Paying – bills and other expenses
  3. Saving – investing your money
  4. Borrowing – when you need some extra money

Let’s look at each of these in turn.

Budgeting

It is essential to budget your money carefully to avoid getting into debt.    You need to be realistic about how much money you have coming in and how much of that is already committed to going out, and keep track of everything else you spend.  To find out more about effective budgeting, take a look at our article Budgeting for Freedom – Top 10 tips to balance your budget!

Paying

As part of your budget, you need to have a clear list of bills that you have to pay regularly.  One way to do this is to set up direct debits so that the bills are paid automatically for you – although you need to ensure that there is enough money in your bank account to be able to pay them.  Things can get more complicated at certain times of year, for example when there are seasonal expenses to manage, so you need to plan ahead for times such as these.

Saving

Also as part of your budget, it is really important to save as much as you can as regularly as you are able.  Every little helps, as the saying goes.  One technique that many people find helpful is to treat savings like any other bill.  Set up a direct debit to put a little money aside into a separate savings account, and try not to dip into this account unless absolutely essential.  This is where financial institutions can help:  there are many different savings accounts available.  Those that pay a better rate of interest tend to be the ones that are more difficult to get your money out of – rather than instant access you often need to close your savings account to get at the money.   This is good in a way, because you will have to think carefully before taking your money out, though may not be ideal in the event of an emergency.  However, this is one of the ways that borrowing can help ….

Borrowing

There are times when you will need to borrow money.  Sometimes, as we just considered, it is for an emergency such as job loss, urgent home repairs, private health treatment, a necessary trip to visit family, or to help out a son or daughter.  At other times it may be to consolidate existing debt and get back on your feet financially.  Whatever the reason, seeking a loan can often feel worrying or intimidating but consumer finance has come a long way in the past few years and you should never feel embarrassed about asking for financial help.  At Loans 2 Go, for example, we offer a range of personal loans at competitive rates.  We will also consider you for a loan even if you have a poor credit record – which can always be a concern.  We treat each case on its merit and look above all at the affordability of the loan repayments.  Even better news is that if we approve your application for a loan we aim to give you the money the very same day, often within 60 minutes!  

So, now you are more familiar with the different areas of consumer finance and how they apply to you.   We hope that this is helpful in getting yourself sorted financially, and if you are in the position where you need to borrow money for any reason then do get in touch with us at Loans 2 Go to see how we might be able to help you.