Kenyans’ thirst for loans has led to the daily development of mobile loan apps in the country. In Kenya, almost all banks provide mobile lending platforms. Many Kenyans are currently trapped in a vicious cycle of taking out loans and paying them back. Some people struggle with self-control to the point where their lives have been centred around one mobile app after another.
Mobile loan apps are easily accessible to everyone with a mobile phone, unlike traditional lenders, whose loans have strict requirements. They are convenient, don’t involve any paperwork, and yield immediate results. This element has a strong appeal to young people, which is one of the factors contributing to the hundreds of billions of shillings’ desire for loans.
Here are some tips to help you avoid over-borrowing from mobile loan apps:-
Financial Literacy
Financial literacy is the capacity to comprehend and apply diverse financial abilities. For a number of reasons, financial literacy is important. One major factor is that financial responsibility is becoming more important. You can learn about finances through reading books, blogging, watching videos, listening to podcasts, signing up for classes, and going to conferences. Financial literacy is crucial since it will provide you with the knowledge and abilities to make your money work for you.
Live Within Your Means
The key to living within your means is to stick to a spending plan, exercise self-control, and regularly save money. You may control your financial situation by keeping your expenditure to only your available funds. If your monthly income is Ksh50,000 but your expenses are Ksh75,000, you are likely financing the extra Ksh20,000 with debt. Reduce your spending as much as possible to avoid exceeding your means. As an alternative, you can look for ways to boost your income in order to cover the gap.
Read: Several Digital Lenders Set To Lose Licences In New CBK Regulations
Delete Money Lending Apps from your Phone
Remove all of those loan applications from your phone and turn off your subscription to their notifications. Consistently rejecting text messages from mobile loan apps will lessen your desire to borrow.
Prepare a budget
Use the 50/30/20 budget plan. This method of budgeting places a strong emphasis on simplicity and attention to the broader picture. The 50/30/20 method recommends allocating 50% of your income for requirements, 30% for wants, and 20% for savings rather than keeping track of every expenditure. This makes it simpler to identify any areas where you may be overpaying.
Emergency Fund
The money you save away for unanticipated circumstances like accidents, expensive home repairs, or unexpected unemployment is known as an emergency fund. A reasonable guideline is to have enough money set aside for three to six months’ worth of spending. Set aside some of your money in a different savings account if you don’t already have an emergency fund.
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