The Importance of Young People Managing Finances Amid the Proliferation of Online Loans

In this era of technological advancement, numerous sectors are evolving through the use of technology, including the financial sector, such as online loans. As reported by the Financial Services Authority of Indonesia (in Indonesia namely Otoritas Jasa Keuangan_OJK), online loans are financial services designed to connect lenders with borrowers through an electronic system. Currently, approximately 101 companies have obtained permits from the OJK. With the proliferation of online loan providers and widespread information, a considerable number of people, especially young individuals, are taking advantage of these opportunities, resulting in some getting trapped in debt due to online loans. Therefore, young people must be equipped with financial management skills to avoid being caught up in the frenzy of online loans.

 

What steps should young people take to steer clear of online loans? The ability to manage finances is a key skill that young individuals must possess. According to Media Keuangan, the Ministry of Finance of the Republic of Indonesia, financial planning, improving financial literacy, and understanding priorities are three out of eight tips recommended to avoid online loans, even those from illegal lenders.

Financial planning marks the initial stage in financial management. It has a positive impact on one's future, allowing an individual to easily control their income and expenses on a daily, weekly, or monthly basis. However, this stage can be challenging if a person lacks in-depth financial knowledge or neglects financial literacy. Hence, literacy is crucial to prevent uncontrolled spending. Consequently, setting priorities becomes essential in determining what is necessary and how one's finances should be utilized.

 

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