The reality of economics is that at some point in your life, you will be forced to borrowmoney in order to be able to achieve certain milestones such as owning a home, a car or even doing an MBA in order to get a promotion at work. Your spending habits will ultimately dictate your ability to borrow.

We take a look at 5 ways to improve your borrowing power.

#1 Maintain a good credit rating

By now you are aware of what a credit rating is therefore we won’t go into the nitty gritty of it. Basically, the better your credit rating, the better your chances of securing finance from a lender. Your credit rating is mostly determined by your debt settling history therefore you have to ensure that all your utility bills, credit card bills and all other bills are paid on time. This will ensure that any lender who looks at your credit report does not see any potential red flags.

#2 Ensure all your debts are paid off

Before any lender can give you money for any purpose such as a mortgage, a normal loan or an auto loan, they will first seek to find out how much debt you currently have. Therefore, the more money you owe, the lower your chances of securing financing. Make it a habit to pay off your debts promptly and never let them accumulate. You will be in a better position to access money from lenders if you have very few or no debts.

#3 Lower your expenditure

Before any lender can give you access to finance, they will want to assess your ability to pay them back. This means that they will look at your spending habits and try to identify any pattern that presents as a red flag such as borrowing to settle any of your outstanding bills. It is therefore important for you to lower your expenditure and ensure you are living comfortably within your means.

#4 Work towards increasing your income

The more your income, the higher your chances of securing finance from any lender. Therefore, if you know that at some point in your life you will need to borrow money for a big project, make it your goal to increase your income. You can do this through fighting for a promotion at work or starting a business to supplement you income.

#5 Ensure your accounts are organized

Having organized accounts is especially important for people who are self-employed. As a rule, before any lender gives you access to their finance, they will require a statement of your account for the past at least two years. The more consistent your income, the higher your chance of securing financing. Having your accounts organized is the only way you can demonstrate consistency in income.

Be sure to borrow only if very necessary.

One of the most assured ways of achieving your long term financial goals is investing your money. This is especially true if you start early in life. Investing goes beyond just having a savings account, or a retirement plan, rather it extends to investing in stocks, bonds, bills and other financial securities.

Let’s look at the 5 benefits of investing money.

Investing will guarantee you a regular income

One of the obvious realities about life is that the older you are, the lower your income generating opportunities. This basically means that when you will get older, your opportunities to make money will diminish. It is therefore important to invest especially early so that by the time you can no longer work, your investments guarantee you a regular income such as through dividend, company stocks, treasury bonds or bills.

Investing leads to increased returns in the long-term

In as much as different investment options carry an element of risk, the potential for long term returns is usually high. To simplify it, if you hold on to your cash for 10 years, its value will more or less be the same down the line. However, if you put this cash in a good long term investment, you are guaranteed that 10 years down the line, this money will have increased by at minimum 50 per cent.

Investing is a great way to beat inflation

When you invest your money in a good venture, it guaranteed to increase annually at a percentage that is significantly higher to the inflation percentage. This means that your investment will cushion you every year from the economic effects of inflation.

Investing gives you financial flexibility

In economics, it is given that your financial situation will change from time to time. You may not have as much spending power 10 years from now as you do now. Investing will help cushion you from such eventualities. Starting to build your investment portfolio early will help grow your financial reserves which you can tap into when your regular reserves take a hit.

Investing can be suited for different financial objectives

Investing does not have to be for the purposes of retirement. You can establish an investment portfolio that is targeted at different financial objectives. The whole point about investing is so that you can grow your money therefore you can set targets such as buying a home, buying a car or going on vacation, and establish an investment plan on how to achieve these objectives.

Ultimately, the earlier you start investing, the more time you will get to learn the art and perfect it thus increasing your chances of getting a much higher payoff.

No one can deny that credit and debit cards have made life much easier and brought a lot of convenience in the way we do our day to day transactions. However, much of this convenience still does not outweigh the benefits that came with cash transactions.

Here are 6 advantages of using cash.

1 cash is accepted everywhere

In as much as credit and debit cards are popular among many vendors, it is worth noting that no all vendors accept them. However, no vendor will turn you away if you have cash. There are vendors who still want to touch and feel money, or some who feel that it’s not necessary for their businesses to incur the extra cost of equipment to handle credit or debit cards.

2 No extra fees for cash transactions

When you use credit and debit cards, you will often incur an extra cost over the transaction cost. Some call it a service charge or transaction fee. However, cash transactions will always be free. You pay for exactly the service you received, nothing more nothing less. Unless of course you are a good tipper.

3 Using cash enables you to budget better

The beauty about cash is that you can only spend what you have with you at the time of doing the transaction. This means that it is much easier to stick to your budgets. The same cannot be said for credit and debit card holders who have historically been known to exceed their planned budgets.

4 Using cash improves arithmetic development

Many people never really think about it but dealing with cash actually improves your math. The fact that you have to keep on physically counting your money in order not to make mistakes while making payments will improve your arithmetic.

5 Using cash reduces debt

Many people today are struggling with credit card debts because credit cards grew shifted from being a convenience into a debt trap as a result of people spending money they do not have. However, when it comes to cash, the fact that you can only spend what you have means the probability of buying what you cannot afford reduces hence reducing your chances of falling into debt.

6 Using cash makes you more financially responsible

The good thing about cash is that before you spend it on something, you will always look back at how much time and effort you had to put in order to make it. This makes you think twice before spending your money on something that is not worthwhile. Such habits make you more financially responsible.

There you have it.

At the end of the day, the choice of whether to use cash, credit or debit card is usually down to an individual’s own preference.

It is said that prevention is the best medicine. This is true especially in economics and to be more specific debt, in that the best way to avoid falling into debt is by not letting the debts accrue in the first place.

The reason we mostly fall into debt is because we mostly need to borrow money in order to be able to finance certain necessities such as our mortgage, car payments and education among others. It is often close to impossible to pay for such necessities in cash.

We take a look at 7 easy tips on how to avoid falling into debt.

1 Try as much as possible to pay in cash: Paying in cash ensures that you spend within your budget. After all you can’t spend cash that you do not have. Therefore to avoid living beyond your means, try as much as possible to limit yourself to cash transactions.

2 Avoid impulse buying: Part of the reason most people accumulate credit card debts is because they spend money on unnecessary things mostly in the spur of the moment. It is important to nurture adherence to budgets so as to avoid impulse expenses.

3 Avoid sales traps that encourage debt: There is a tendency by most people to fall into sales traps that result into debt such as “buy now, pay later” retail offers. Such purchases end up accumulating thereby increasing your debt.

4 Do not borrow to spend: Never at any time develop a habit of borrowing money to spend on essential products. These are the kinds of products you will need regularly therefore you should use your income and not borrowed money. Borrowing to finance staple purchases is most definitely a journey into debt.

5 Go for the best offer: As we have established, sometimes you have to borrow in order to finance certain purchases. Therefore, if you must borrow, ensure that you find the lender who offers you the lowest interest rate as well as accompanying fees.

6 Monitor your credit card: Credit cards are arguably the most common source of debt currently. It is therefore important for you to closely monitor your credit card payments and keep tabs on all your purchases so that you do not spend beyond what you can afford to pay back.

7 Settle your credit card bills: There is a tendency by many people to just make the minimum payments on their credit card yet their expenditure is much higher than the minimum. This will ultimately lead to accrued bills which will lead to debt. Make it a habit to settle your entire credit card bill so that as you spend, you are doing it on a clean slate.

There you go. Do this and you will thank us later.

Most people don’t understand the effects on inflation on their finance. In fact, they will never notice the effects of inflation until it is probably too late to do anything about it. Inflation will generally lower the value of your money as the prices forconsumer products go up. This means that for an investoryour future dividend and interest payments will not be as valuable as you had anticipated.

However, there is good news. You can actually proactively protect yourself from the effects of inflation. Here are 5 tips on how to go about it.

1 You must invest in real assets

In economics, the best way to protect your money from losing its value as a result of inflation is to invest it in real assets such as property, gold, agriculture and eveninfrastructure. These are markets that usually perform well especially during times of inflation because they continue to rise even as inflation rises.

2 Ensure you get the best interest rates

During times of inflation, people lose money on their investments because they did not get a good interest rate that is high enough to protect their returns from the effects of inflation. It is therefore important for you to ensure that you have done the math to ensure the interest rate you get is sufficient to cover the eventuality of inflation.

3 Use your savings as opposed to borrowing

During times of inflation, borrowing means you will have to repay the money with a high interest rate. It is therefore advisable that if you have money available in your savings account, to use it as opposed to taking in debt to finance your expenditure. However, try not to spend all your savings or your emergency money, and be sure to refund this money into your savings account when things stabilize.

4 Be sure to protect your pension

One of the biggest victims of inflation are usually pensioners who are living on a fixed income. Their spending power will drastically go down owing to the rising prices of goods and falling value of money. It is therefore important to start building you retirement nest egg early in life, and ensuring that you maximize on any of the available savings options and offers such as employer matching options. This will ensure that by the time you get your retirement, you have more than enough set aside to cushion you from the effects of inflation.

Be sure to take these simple measures and you are on your way to financial stability.