Deal­ing with fi­nan­cial li­a­bil­i­ties

Panay News - - REGION - By Maria Lyn F. Com­intan,

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. (

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