Should I Be Borrowing Or Saving For Larger Purchases?
The question of whether you should be borrowing money or saving for larger purchases is something that doesn’t really have one specific answer. The individual answer and choice are dependent on your personal finances and how you manage your money. Many people think that you should save up to avoid falling into the cycle of debt. Whereas other people believe that saving up takes too long and that loan repayments are easy to manage if you can afford them. Therefore, proving that the whole concept of whether you should be saving or borrowing is a personal preference Although it may seem like a simple question, there are numerous factors that come into play when making your decision. Here are a few examples to use if you’re stuck on the fence between the two.
Reasons For Saving Money
Saving up for something instead of borrowing credit for the purchase is often seen as the best option. However, in many cases, this decision isn’t made by the individual’s choice but rather by their availability. Often, their financial situation might hold them back due to a bad credit score or their inability to fit the requirements. Therefore meaning that saving money is their only option. However, despite taking a longer period of time, this option does have its strengths.
Firstly, when deciding whether you should borrow or save, you should ask yourself whether you really need to make the purchase. If your answer is no and the purchase is more of an impulse buy rather than a necessity, then perhaps you should save your money. This way, you have time to think about whether or not you really need it while your savings are growing. There are plenty of saving techniques that can be used to speed up your savings journey. Some of these include the 50/30/20 method and the envelope savings technique.
Secondly, saving up and using your own money to make a specific purchase will keep you away from unwanted debts. By not borrowing a personal loan, you do not need to worry about any repayments or bills that are coming up. After all, missed or late repayments can soon impact your credit score and cause further issues.
Reasons For Borrowing Money
Borrowing a personal loan is a great way to get your hands on more money than you have. If you are making a bigger purchase, saving up isn’t always the best option. Although saving has fewer risks, borrowing money can be one of the more convenient routes. In most cases, when applying for a personal loan, if approved, you receive the money on the same day. Therefore, the process is very fast and simple, which is especially helpful if you’re borrowing in an emergency. Although borrowing more than you have might sound daunting, the repayment process can be very spread out, meaning you only repay a small amount each month.
Secondly, following on from borrowing in an emergency, not everybody has time to save up a larger sum of money. In some cases, borrowing a personal loan might be the best, and most efficient option to choose from. There are many things that we would struggle to live without. For example, a washing machine, or another important appliance. Therefore, if these items broke unexpectedly, it would be difficult to go without them until we had the right amount of money saved. Hence the importance of personal loans. Find out more about borrowing here.