You’re young, on your own and just starting a new job. It’s not easy in the beginning to budget your income and keep close tabs of your expenses. Plus getting paid bi-weekly or monthly can make it that much harder to manage your finances.  Don’t despair, it will get easier when practice and good habits are put in place.

It is essential that you begin to make the right financial decisions as soon as possible. You don’t want to start your life in the “real world” without healthy financial education because certain decisions may affect the rest of your life. For instance, if you overspend, overuse credit cards and take out payday loans, you are putting yourself in financial jeopardy.

It’s easy to see the dangers of overspending and overusing credit cards, but are you aware of the potential risk of Payday loans? Payday loans are one of the common mistakes made by young adults that should be avoided. Why, because payday loans are short-term loans for a relatively small amount of money which is lent at a high rate of interest. And that money must be repaid when you receive your next paycheck. These loans are also called cash advance loans or check advance loans.

While these loans are an easy way to get cash fast, you should be extremely careful because the high-interest rates will put an enormous drain on your income. Payday lenders charge borrowers extremely high levels of interest which can range up to 500% in annual percentage yield (APR). Many states have lending laws that limit interest charges to less than 35%. However, payday lenders fall under exemptions that allow excessively high interest, and regulations on these loans are governed by the individual states.

Payday loans should be avoided, and lower interest loans or other options should be obtained whenever possible.  Below are a few alternatives.

• Check small banks – some offer better options than the high-interest rate of payday loans.
• Ask Your Employer for a paycheck advance – if you get paid once a month chances are you are already owed money.
• Check your local credit union – they may offer small, short-term loans to members.
• Use a credit card as the maximum interest is 35% which is way lower than a payday loan. Pay it off as soon as possible and use only for emergencies.
• Borrow from family or friends – make sure you have all the details in writing and pay it back as soon as possible. You don’t want to ruin your relationships.
• Review your budget and cut cost where possible.
• Start an emergency fund and only use it only when necessary.

So, save yourself from paying extremely high interest on a Payday loan and pursue other options. Improve your financial habits, educate yourself on wise financial choices and start to develop a secure financial future.