When to Save and When to Borrow. A Guide to Making Financial Decisions

October 21, 2019

Financial decisions aren’t easy, especially ones that relate to your long-term future. Knowing when to apply for a personal loan, credit card or other form of borrowing and when to tighten you purse strings so that you can save a little for a rainy day can be difficult. Though this isn’t a totally exhaustive guide, Asteria’s tips on working out when to save and when to borrow could help you make your money management decisions a little easier. Read on to find out more.

When to save

When you can afford to put money away

Unfortunately, not everybody can afford to save, especially if debts, regular monthly payments and other demands are placing a strain on your existing income. If saving means that you’re going to miss repayments on personal loans or credit cards, you are clearly not in a position to be putting money away just yet. This doesn’t have to be a cause for panic, but it will be an indicator that you need to start generating some more income.

When you have a long-term financial goal

By long term financial goal, we mean larger purchases and investments such as cars, holidays, houses, college funds and retirement kitties. Saving without any real purpose can be incredibly difficult as you will have no motivation to curtail your spending. If you have a real and manageable target to work towards, things become a lot easier. The motivation to put money away each month often comes from a sense of working towards something you have dreamed of doing for some time. This could be providing a better life for you family or allowing yourself to take that once in a lifetime, dream holiday around the world.

When you have identified difficult financial periods in the year

Christmas, Birthdays and periods of unemployment can all be particularly testing times for people when it comes to finances but saving to combat any shortfall in your income can be a sensible and very effective way to safeguard against money struggles. If you know that certain times of the year generally result in you falling into debt or having to go without, putting away a small amount each month means that you can bolster what you do have and maintain a comfortable lifestyle.

When borrowing will cause financial problems for you

Borrowing when you can’t afford to pay anything back is a serious mistake and should be avoided at all costs. If you have your eye on a new TV, laptop or kitchen, it’s always worth asking yourself if you really need to get them immediately. If saving is the option that will allow you to get what you want eventually, without having to deal with monthly repayments you can’t afford, always consider this option before you sign up for a payday loan or a personal loan.

When to borrow

Emergencies and Unavoidable Purchases

Some things in life just can’t wait and though it would be nice to have the money we need for any of the unpredictable problems that modern life can throw at us, this isn’t a reality for many people. When cars break down, loved ones get ill or serious structural repairs need to be carried out on your home, sometimes the best option is to apply for a personal loan so that you can maintain a good standard of living. In the Philippines, finance providers will usually accept applications for any purpose, as long as they consider it a reasonable use of funds and they are confident that you have the means to pay back what you owe eventually. When applying, always provide as much detail as you can, especially if you need the funds for emergencies or essentials that you can’t live without.

When you are expecting a sum of money

Sometimes, in the case of things like wills, inheritance or final wage packets, delays are an inevitability. If you know are likely to receive a sum of money in the near future but are in need of certain items immediately, it makes sense to use a reasonably priced personal loan to avoid having to wait to get what you need. In the Philippines, pay day loans can be expensive, though this is only the case if you take a long time to pay back the amount you have agreed to borrow. If you are certain you are going to have the funds in your account within a few days or weeks, this may actually be a good option for you.

An investment in yourself or your business

When using personal loans in the Philippines, many customers are getting smart. Rather than using them for non-essentials and treats, they are beginning to realise the potential for investing further education or business training. Though you won’t see a return immediately, courses that allow you to increase your earning potential, small businesses that can generate extra cash and even self-care ideas such as private health services can all be good uses of personal finance. When applying for a loan for this type of thing, you usually stand a good chance of being accepted by the majority of lenders unless you have particularly bad credit or other financial problems.

Once in a Lifetime Opportunities

We only get one life and it’s important to make the best of opportunities that are presented to us whenever we can. In situations where you know a chance will never come around again, borrowing can be a way to help make your dreams a reality. Whether it’s the car of your dreams at bargain price, an opportunity to invest or an invitation to an event you never thought you would be able to attend, sometimes you need to be able to treat yourself and say yes to things that make you happy.