When it comes to personal finance, no one size fits all. Every individual is different, and so are the financial goals. Moreover, every individual has different capabilities to handle risk. Unfortunately, in the current times when opinions and trends spread faster than fire, it is crucial to understand your requirements before you follow them. Here are a few personal finance trends that may cause more trouble than peace.


Applying for payday loans

In recent times, payday loans have become extremely popular with the people. Earlier, they used to be available at store counters. But now a simple google search will throw a hundred results if you want to apply for them. Payday loans are short-term loans that seem promising when you have an urgent need for cash. The loan tenure is just a couple of weeks. The fact that they are not based on a person’s credit score makes them all the more appealing. However, they come at an exorbitant interest rate. You will be surprised to know that some of these loans cost an APR of 300-400%. And this is not even the worst thing about payday loans. You may get trapped in a vicious cycle when you take one. If you can’t pay your current loan, you will have to avail of another one to clear it.


Taking a considerable student loan

Education is expensive, and it is understandable if you have to avail of student loans to pursue the career of your dreams. However, availing too much credit can land you in a soup. Firstly, student loans are expensive, and there is no guarantee of a decent job in this economy. Secondly, your responsibilities multiply when you start earning. You will have to manage your rent, travel and food bills from your income. Several students don’t foresee these changes in their lives and end up taking more student loans than they can afford. Instead, you can try for scholarships, community colleges, or working part-time while studying.


Trading in cryptocurrencies

Whether you have an avid interest in finance or not, you would have heard about cryptocurrencies. They have been touted to be the next big thing for quite a long time. Cryptocurrency is a digital currency that is free from any control of the government or an individual. It may sound interesting on paper, but people have lost tremendous amounts of money with their investments. To secure yourself, invest only a small amount of your savings into them. Try to explore other reliable options such as savings account, stocks, and bonds.


Relying on credit cards

Credit cards are helpful when you are short of cash and need urgent money. However, the golden rule of using credit cards is to avoid paying interest at all costs. The APR on credit cards is expensive, and that makes credit cards one of the costliest lines of credit. Credit card debt is one of the most prevalent financial problems in America.

Another worrisome situation is when people start using their credit cards to earn reward points. For instance, several people fall prey to their travel-related schemes. In an attempt to enjoy discounts and free travel, people end up spending more than they can afford.

You can avoid this situation by restricting your number of credit cards to one or two. Secondly, always keep a tab on the amount you are spending. Lastly, try to budget your expenses. You can use an app if you aren’t comfortable with excels and numbers. If you are unable to control your impulsive purchases, you can try paying in cash for some time.


Not having emergency savings

Emergency savings is like your guardian angel. It can protect you during the worst of times. Emergencies can strike anyone and anytime, and the least you can do is to prepare yourself financially. As a rule of thumb, you need to save at least three to six months of your income in your emergency account. Having some money to lean on will protect you from taking payday loans or landing yourself under credit card debt.

The key to building your emergency fund is to save more. You can have a temporary second job to make more money until you build this fund.