Our Spending And Saving Behavior And Its Relationship To Our Financial Stability

The spending and saving behavior of most people is quite predictable

. Our usual tendency is actually to spend more and save very little. It is no surprise then that at crucial moments, we are left without a single penny in our pockets.

With us being short in cash and our receipt of the next paycheck still several days away, we resort into borrowing money. Of course, the first ones that we are trying to approach is family members and friends for the simple reasons that they know us very well and that are reliable. Unfortunately, though, even they do not seem to have extra cash that could be loaned to us or could be preoccupied with their own financial problems.

If we could not borrow from family and friends, then the next logical choice would be to try out entities that extend cash advances. Cash advances are small, short-term loans that are intended to cover our expenses until we receive our next paycheck. Compared to banks, non-banking institutions and other formal creditors, the amounts being loaned on cash advances are small, good enough to fill in financial gaps such as bills payments and the purchase of basic needs.

In the United States, the extension of cash advances comes on a case-to-case basis. Arkansas, Connecticut, Georgia, Maine, New York, Pennsylvania, Vermont and West Virginia are some states that made illegal the business of extending payday loan. Utah and other states, on the other hand, do not restrict payday loans but are implementing very strict policies.

We have to be aware of certain things regarding a payday loan. Utah, California and other states where cash advances are being allowed are monitoring the interest rates being charged by cash advance creditors to borrowers. In most cases, the interest rates plus other charges are way too exorbitant, causing authorities to step in so that things can be regulated.

When get into trouble, our main tendency is to go to a creditor and apply for a payday loan. Utah and other states are allowing such practice. W should not allow ourselves to undergo the inconveniences of paying exorbitant interest rates and charges if the only solution to our financial problem is to actually change the way we save and spend money.

by: Sofia Britts

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