Borrowing is something that many people do these days. For larger purchases such as homes, cars and university fees, there may be no choice but to borrow money or else these things would never be bought. However, for smaller purchases, it is sometimes possible to save up rather than get a debt and it is worth considering whether this would be a better option.
Some people find it easy to save up. They may save money each month. The easiest way is to pay money into a savings account each time that you are paid. The money will not be available to spend, so you are more likely to manage your money and not need to dip into those savings. However, it can be more difficult for those that wait and see how much money they have left at the end of the month and save that. It often ends up with no money left to save because if it is in the account it is seen and spent. If you would like to save more money, then it could be worth setting up a direct debit to put money into a savings account every time you get paid and work hard on budgeting so that you manage on the money that you have left.
The reason that saving up can be better than borrowing is the cost. If you save money, you will get paid interest on it and even if it is a small amount you will be able to make some extra money while you save up for the item that you need. However, if you borrow money you will be charged for that borrowing. There are many ways of borrowing but they all have a cost and the charges do vary between different methods. However, they will all cost you money unless you find an interest free deal, which is rare. This means that you need to decide whether it is better for you to borrow money or save up for an item. Calculate the cost of the borrowing and work out whether you still think that the item you are buying is worth it at this extra cost. That decision will be very much up to you and will depend on the value that you hold on that particular item.
The main problem with borrowing does not tend to be the fact that an individual item costs more money. Although that should be a consideration, it is the more long term effects that can be more of a problem. If you borrow a little money, it may feel okay to borrow a little more. Then the debt can start to creep up, you could end up borrowing a lot of money and the cost of that could be very much more significant than just borrowing a small amount of money. It may also feel easier and easier to delay paying back the debt and then the cost will grow and grow as well. You may not think that you are the sort of person that this will happen to, but it can creep up on you and so it is a good idea to think hard about borrowing. Also once you have started borrowing, it may not feel like such a scary thing to do. Therefore it may make other forms of borrowing seem more acceptable. Although some types of borrowing can be very useful, many types are expensive and not worth doing. It can be a skill to work out which is which in your personal circumstances and whether you should be borrowing or not. If you think hard every time you borrow money and find the cheapest way to borrow, after considering whether you really need to borrow, then you will be taking a step in the right direction.
There are some items that you would never be able to afford without borrowing. Buying a home, car or university are fees are examples of borrowing that most people have to do if they want to own a home, car or get a degree. These can be thought of in a different way to other borrowing though. For example, buying a home can be thought of as a sort of investment. Often owning a home is cheaper than paying private rent and once you have paid for the home, you can sell it at any time and get the money back and it should increase in value over the years that you own it. If you do not want to sell it you can always pass it onto your loved ones.