Over the past year, many have experienced changes to their financial situations. With this in mind, Shawbrook Bank conducted a study that revealed what concerns and anxieties Brits have about personal loans, secured loans and understanding ‘financial jargon’.
According to the report, 59% of Brits agree that the language used in personal loan applications, and documents, are difficult to understand. More than one in two Brits claimed this would put them off applying for a personal loan.
Initial assumptions about whether particular groups would be accepted also caused financial anxiety. The report discovered that one in three Brits are unsure if self-employed individuals can be approved on a mortgage.
There are several ways people can better prepare themselves when it comes to finances. Sally Conway from Shawbrook Bank provides five helpful tips which could help overcome, and prevent, financial anxiety.
1. Make a budget and stick to it
Budgeting is needed to fund long-term endeavours. Knowing how much money is coming in and how much expenses total are important when planning to invest in a property or take out a loan.
All expenses should be included, yes even the odd takeaways, to ensure every transaction is accounted for. When this is done it is easy to see whether more money is going out than going in. If this is the case, it would be best to try and cut back on unnecessary expenses.
Making a budget might sound daunting at first, but if it is realistic, it can be done. Having every expense noted down makes it easy to find where to cut back.
Budgeting properly will make more Brits feel in control of their finances and on the way to financing that dream property.
2. Learn about all things finance
Anxiety usually occurs because of a fear of the unknown. By learning about mortgages, personal loans and secured loans, it will make the application process much easier.
According to the study, one in three people were unsure of their credit score. If they found out their credit score before, they would have been better informed about how much a loan provider would lend.
The study also showed 34% stated they would search terminology they were unsure of on Google. If more people researched what these unfamiliar terms meant, it could perhaps reduce their anxiety because they would be more familiar.
Learning about financial products and money management makes people better prepared and confident.
3. Ask for help or speak to your friends and family
The study showed only 6% said they would not ask anyone for help, which indicates the majority did. Talking to friends and family can give guidance. Perhaps there are family members or friends who have taken out a loan before or taken out a mortgage before. Maybe they are new to this too. The only way to find out is by asking.
If keeping financials confidential is preferred, this is available too. There are independent organisations that are here to help if financial advice or help is needed.
4. Start building an emergency fund or a buffer
One thing Covid-19 has taught everyone is the future cannot be predicted. Building an emergency fund or buffer can help prepare if something unexpected occurs. Three month’s worth of earnings is typically recommended.
5. Shop around and research
There are plenty of financial products to choose from, so it is important to consider all options before committing to one. Researching what each financial product has to offer beforehand is vital before signing the dotted line.
Financial anxiety, that some Brits are experiencing during these uncertain times, can be overcome by implementing these five tips. Home-ownership is a goal for many people but through researching, building an emergency fund, getting advice, learning about finance and budgeting, it can be done.
Each day financial habits can be altered to put many in a better position to buy a property. Whether plans are around the corner or a few years away, it is better to be prepared.
You can view Shawbrook Bank's full research here.