How to borrow wisely

How to borrow wisely

Ask yourself: What are you borrowing for?

 

 

From a cracked windscreen where you have to find the money to pay your insurance excess, to needing money to cover unexpected medical expenses – emergencies come up every now and then. If you don’t have your own “emergency fund” that you have built up monthly, it could lead to you needing to borrow money to make up for the shortfall.

But these should all be covered by your savings – remember that it’s not good practice to borrow for these things.

If you have to borrow, you should borrow to pay for things that have lasting value, such as your home, home improvements, a motor vehicle, or perhaps big furniture items Don't borrow for things you can consume immediately.

If you have to borrow, assess your needs.

Before borrowing money, carefully consider why you need the funds and how much you need. Determine if borrowing is necessary and if there are alternative ways to meet your financial needs. If you make a monthly budget and stick to it, it helps minimize your need to borrow money.