Stop me if you’ve heard this one before. When you were growing up your parents nagged you time and again about ensuring that you paid into your savings. From the moment you climbed onto your bike to carry out your first paper route, they impressed upon you the importance of setting something aside for a rainy day. “Neither a lender nor a borrower be” was their mantra, and they taught you that loans and credit cards were a sure path to financial damnation. Unfortunately, they could not have anticipated just how difficult it would become to simply get by in the (seemingly science fiction) era of the late 2010s. They could not have imagined how much it would cost just to get by in a post-crisis economy and a housing market that relies heavily on expensive private rentals and makes the prospect of home ownership a pipe dream to many. They could not have guessed that setting aside a little something in savings would become such a big ask in an era where we seem to have less and less disposable income.

Borrowing is, for ,many, an unavoidable reality as we approach the 2020s. But that doesn’t mean that we can’t borrow smart. Before filling out an application for any loan or credit card, it behoves you to ask yourself the following questions…

How will the loan affect your credit score?

The key to managing your finances effectively is to stop simply reacting to your changing circumstances and start adopting a more proactive approach. It’s essential to think about your financial needs tomorrow as well as the necessities of today.

For example, if you take out a loan today, how will this affect your credit score later on down the line? While you may think that your credit score will be fine so long as you keep up your repayments, it’s worth remembering that depending on how much you borrow your loan may inhibit future borrowing. This may make it harder for you to get a mortgage or to get a big enough mortgage to secure the home of your dreams.

Does your lender apply a human touch or a “one size fits all” approach

It can be extremely frustrating when your application for a loan is rejected in the face of overwhelming financial need. However, if the bigger banks turn you down, don’t let this drive you into the arms of predatory loan sharks. Look for a provider that assigns an individual Customer Care manager to every applicant. They will apply a more human touch that will enable you to borrow without pushing you into the kind of agreement that can leave you financially vulnerable.

Do you know what you’ll do if your circumstances change?

Finally, most people’s financial circumstances are ever changing. Who knows what financial changes the coming year will bring for you. Could you move to a larger property leaving you with less disposable income? Could you get a promotion at work, leaving you with more? In either case, it’s up to you to consider how a change in circumstances will affect your borrowing. Will you be able to pay off your loan faster and reduce interest payments if you find your income grows? Will you be able to reduce your repayments if you face financial trouble.

Choosing a flexible lender can make for a less stressful financial future.