5 Practical Tips On How To Properly Allocate Your Personal Loan To Spending

5 Practical Tips On How To Properly Allocate Your Personal Loan To Spending by CF Lieu - Certified Financial Planner Malaysia

You can use personal loans for various purposes and reasons. If you are a student, you may utilize the money you borrowed to finance and sustain your financial and educational needs.

If you are a stable adult who is on the verge of starting a new life, you may also use it as a fund for your wedding expenses in case you are about to get married, or you may use it to start a small business if you want to have an investment.

There is a long list of purposes that your loaned money may serve, but it all boils down to how you properly spend it to all your expenses without getting bad credit in the long run. To guide you on how to adequately manage your finances, here are some practical tips that you might consider following:

Make A List Of All Your Expenses

Getting approved for your loan application and receiving a bulk of money can be quite overwhelming. Although you most likely already have a plan on how to spend it properly, you also have to make sure that the amount is enough of a budget to spend for all your expenses.

That is why you must make a list of all your expenses. In that way, you would know which among the list should come first to your spending. In listing down your expenses, you must include the reason for your loaning as a priority.

You must also include your monthly expenses, such as your monthly utility bills, rent, food and transportation expenses, monthly debt payments, etc., on the list.

If you are still planning to apply for a loan, it is greatly recommended that you do this listing of expenses before making the actual loan application. Aside from it would help you decide the amount you are about to borrow, it would also make budgeting easier after you receive the money.

Create A Budget Plan

One of the most practical ways to avoid having bad credit and cash shortages is to create a budget plan. A budget plan is a process of planning how to properly allocate your cash to balance your expenses.

When creating a budget plan, the most recommended model is the 50-30-20 rule budget. The 50-30-20 rule budget means that you must allocate 50% of your budget to your needs, 30% to your wants, and 20% to your savings and debts.

When you apply for a loan and get approved of it, you must always remember that it is a debt that you have to repay with interest over time. Thus, you have to include the process of repayment on your budget plan.

Each loan type has a different repayment process. Some lenders offer monthly payments, and some offer payday payments. To know more about payday personal loans, you may visit and read more at Personal Money Store.

Avoid Overspending And Focus On Your Necessities

You must allocate 50% of your budget to your necessities as these are vital to your living and survival. Your necessities, including your food, transportation, rent, water, and utility expenses, should be the first things on your list.

Your wants for luxurious materials should be the last thing on your budget, especially if you are having financial difficulty.

It would also be best if you stop or minimize using your credit cards. Use cash when going to the grocery and focus on buying only those essential to your living. Avoid overspending to avoid having bad credit in the future.

Pay Off Some Of Your Debts

You may use the money you loan to pay off some of your debts. In that way, it would be more manageable for you to track down the repayment dates of your credits.

When choosing which of your credits you should pay first using your loaned money, you may consider paying first those with the smallest balance, or you may choose those with the largest balance.

You may also consider paying first those creditors who are quite stressful to you, especially those who have a high-interest rate or those who continuously add unnecessary payments. The bottom line is that it is necessary to have a list of all your debts to be easier for you to track them down.

Set Aside A Portion For Emergencies

When making a budget plan, you must include in your list a portion that you can use only for emergencies. In that way, you will avoid having an unexpected financial blow when facing an accident or emergency.

You may add this portion to your savings, only to be used when greatly needed.


If you want to be financially stable and healthy, you must know how to properly allocate your money to your expenses. The tips mentioned above may guide you in managing your finances, but they are useless if you don’t put them into practice.

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