Which is better? Borrowing vs Saving Money
The debate on borrowing vs saving money is something that crosses everyone’s minds during their lifetime. If you have a major purchase coming up, you might be wondering about what the best way to pay for it is. Saving up is always an option, but will that go well enough for you? Or would taking out a personal loan be more suitable… Remember, do whichever benefits you best.
With both options having their advantages and disadvantages, how do you decide what is best for you and what financing solution to choose?
Saving Money: Is it right for you?
It is always important to save some of your income every month. Developing a savings routine is always important as in the unfortunate scenario that you fall sick, are in a car accident or even lose your job etc, having savings to cushion you before getting back on your feet is needed.
Here are some pros and cons of borrowing vs saving money:
You’re in charge of how much you save
The biggest difference between borrowing vs saving money is that you don’t owe anyone anything, and you don’t pay any sort of interest. From many points of view, this can be the most affordable financing solution.
Bad credit doesn’t matter
By saving, no one has to review your credit score. So, if you’re looking to purchase a car, for example, if you show up with cash, no one will question your credit rating because it isn’t relevant to the present transaction. It can be incredibly liberating to not be judged and assessed based on a number reflecting your past.
You can only afford as much as you save
One drawback with saving is that you can only ever afford to spend as much as you’ve saved. So, if you want to make a major purchase, you would need to save a significant amount of money. However, most of the time, that is simply not possible and can take a long time. This can also become a problem with smaller expenses, so if you’re not a very good saver, you may not be able to buy much.
Borrowing Money: Will this be the best solution?
Borrowing money can look like the easier alternative if you want money quickly, but make sure to weigh up all your options before choosing which one is best for you. Remember, you could also decide to do both if needed.
You can get more money
If you want to make a major purchase, then a loan will be your best bet, because it enables you to get more money than you would have otherwise been able to save. So, assuming you’re interested in buying a home, making a trip, or having a massive wedding, you can materialise those plans with the help of a loan. Then, you can repay it over several months or years, in affordable instalments.
Money can be with you instantly
A loan enables you to get the money quickly. Depending on the type of loan you get, you can have the money in as little as a few hours, or it can take a few days for it to reach your account.
Paying interest and having bad credit
Interest is something you can’t get away from, most of the time. More than likely, whenever you borrow money, you are going to have to repay with additional interest. Also, approval for a loan can rely on your credit score. If you’re worried about your credit score, you can always read about bad credit loans, for more information on how to get a loan with bad credit.
Both options are worth considering, but like everything else, they also have a few drawbacks. Whether you’re better off saving up or getting a loan depends on your financial situation, ability to save or repay, as well as how you are planning on spending the money. So, make sure to take every aspect into consideration.