Dealing with financial liabilities
FINANCIAL literacy is an important skill that a student must master for them to survive the challenges that come with the real world.
Eventually they will have to be on their own. They must manage the different aspects of their life, which also includes their finances, by themselves.
Earning money is one thing, maximizing it within a specific period of time effectively and habitually is another.
If money runs out, the person could either find more sources of income through getting a sideline after office hours or entering into debt.
Debt can be either interest-bearing or noninterest-bearing.
The interest income of the lender can easily be known as it is stated in the agreement and can be distinguishable if you can recall the principal amount.
Do not let non-interest-bearing loans fool you as they do have interest but this is already added to the principal amount.
In loans, there are simple and compound interests.
A simple interest is calculated on the principal amount of the loan. The compound interest, on the other hand, is interest added on top of the previous one.
When entering into debt, we should not only be focused on getting the debt. We should also give attention to coming up with plans on how we can pay off the debt – finding means to earn money, allocating a specific amount of money, and consistently gathering the amount for a specific period.
We should also consider if whether or not we should pay way ahead of time or one day before due date – the longer we have our money with us, the more we can make the most out of the money we have.
If we do not have the means or the money to pay off the debt without consuming the money for other needs, it is better to stay away from debt and focus on having a sufficient amount of money.
If there is a discount in paying ahead of time, then we should pay way ahead of schedule; if there is none, we should take our time in paying off the debt.
Handling financial liabilities well will help any person from drowning into debt by either avoiding unnecessary debt or making sure that they have enough money to pay off the debt while having money for other needs and for savings, too. (