May 4, 2023
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Money Hacks

The Importance of Budgeting When Using a Cash Advance

Before taking out a cash advance, understand how to create a budget and manage expenses to avoid financial trouble down the line 💅

Maybe you’re hit with an unexpected car repair. Or you need help with a bill right before payday. Whatever the case, a cash advance can sometimes be a solid option to tide you over until you get your paycheck.

In fact, a cash advance with 0% interest can generally be a much safer option than the payday loans out here literally charging 600% interest. Especially if you have bad credit: with a cash advance from Cleo, there are no credit checks required.

Get a quick spot of up to $250 with Cleo. No interest. No credit checks. No stress.*

You should still be careful when taking out cash advances to avoid becoming over-reliant on them. Cleo is the money app designed to eventually help you stop needing cash advances, so as well as a cash advance, you can also get access to a ton of free budgeting features.

In this blog, we’re gonna talk about the importance of budgeting when using a cash advance and provide some tips on how to budget using Cleo’s free features.

Why budgeting is important: Avoiding debt

First and foremost, budgeting is super important when taking out cash advances because it can help you avoid falling into a cycle of debt. It’s easy to become trapped in a cycle of taking out and repaying cash advances, especially if you don't have a plan in place for repayment.

Without budgeting, you might find yourself using cash advances to cover everyday expenses, or taking out one cash advance to repay another. With a solid budget in place, you can deal with the root problem: the reason you didn’t have enough cash to make it to payday in the first place.  So you can avoid taking out cash advances in future.

Before you start: Check fees and interest rates

Always be aware of the fees and interest rates associated with your cash advance. A Cleo cash advance comes with 0% interest, so if you get $170, you repay $170. But if your cash advance comes with interest, you’ll need to do some math to make sure you know how much you’re repaying. Check out our article on calculating the true cost of a cash advance if you wanna know more about this.

Once you know the true cost, you can make sure you factor this into your budget correctly.

Step #1: Track your spending

The first step to budgeting is to track your income and expenses. This will give you get a clear picture of your financial situation. Straight off, you’ll be able to see if you have enough cash to pay the cash advance next month, or if you need to put a plan in place.

After you’ve downloaded Cleo for free, you’ll need to connect your main bank account. Don’t worry, Cleo will never move any money around without your consent. At this point, our super smart AI just uses this information to track your incoming money and expenses.

Step #2: Create a budget

Once you have a clear picture of your income and expenses, Cleo will create a personalized budget that works for you. Here’s how it works:

  • Get connected 🤝 download the app, sign up, and connect your main checking account.

         Select the Budget tab, then under Next Steps you’ll just need to tap on each icon to customize:

  • Income 💸 select your latest paycheck(s) so Cleo knows when you get paid
  • Bills 👀 add your bills and double-check to see if they’re right so they can be tracked correctly
  • Spend limit 🥡 set a realistic spend limit‍

🔒 Once you’re done customizing your budget, you’ll unlock your ‘left to spend’ and ‘left per day’ amount. So you can resume your regular purchasing, without ✨ The Guilt ✨ hanging over you.‍

Sticking to a budget is also crucial. So Cleo will call you out when you’re about to hit a spending limit.

As you go, you can adjust your budget to suit your needs, and factor in your cash advance. It’s all about setting realistic goals.

Step #3: Prioritize your expenses

Once you’ve followed the first few steps, you might find that you’ve freed up some cash to go towards paying your cash advance.

Especially if you used Roast Mode to see how much you spent on Uber last month 🙃

Or, you might have discovered that subscription you swore you’d canceled in 2019, and freed up a few dollars there.

Tracked your expenses and you have the same amount of cash as you expected? DW - because you’ve now got a track of what’s essential and non-essential spending, you can move some of the cash from your non-essential spends towards paying back the cash advance.

Set a spend limit on certain areas, like eating out and retail, until you’ve freed up the cash for repayment.

Step #4:  Build savings to avoid cash advances in future

Maybe the most important step. Building a cushion of savings you can fall back on for unexpected expenses.

And with Cleo, you don’t even have to think about saving. Just turn auto-save on, and watch your savings build.

Here’s how auto-save works:

  • Each week, Cleo uses your budget to work out how much money you can afford to hide from yourself.
  • On Wednesday Cleo will calculate how much you can afford to save that week, and she’ll ask you if you want to move it to your Wallet.
  • If you agree, she’ll move the money on Thursday. If you say no, it’ll stay in your bank account.

Simple af.

Why budgeting is important when using a cash advance

Budgeting is essential when using a cash advance. A budget and a cash advance are best friends. A budget and a cash advance were who that guy was talking about when he said “and they were roommates.”

By creating a realistic repayment plan, prioritizing expenses, and being aware of fees and interest rates, you can avoid falling into a cycle of debt with cash advances and take an important step toward financial health.

There’s only one thing left to do…


Enjoy this post? Give it a share or send it along to a friend. You never know, it could make a big difference. Big love. Cleo 💙‍

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