When it comes to borrowing money, there are two different types of people in the world. Some like to put everything on their credit card or take out a loan which they can then pay off for a number of months or even years in order to get an instant purchase, whilst others prefer to pay in cash for everything and won’t buy anything unless the money is coming out of their own hard-earned savings. Whilst there is no right or wrong way between the two and it’s down to personal preference whether you borrow or save, there’s no doubt that each method has its own set of advantages and disadvantages. If you’re considering making a large purchase and don’t know whether it’s best to borrow or save up, this guide may help.
When deciding whether or not you’d prefer to save up or borrow money, one of the most important factors which should help you decide is whether or not you can wait for the money to be saved, or if you need to make the purchase immediately. For example, if you don’t have a car and need one soon to be able to drive to a new job, saving up enough money to buy a car outright may not be possible, in which case you’ll need to look for deals on car loans Adelaide. However, if you’re considering making a large purchase that you don’t need in the immediate future and will have a few months in order to save some money, it may well be worth saving up for it instead as you’ll find that it’s cheaper without all the interest that you’d need to pay if you took out a loan or put the purchase on your credit card.
When considering your options between saving up to make a purchase or taking out a line of credit in order to fund it, it’s essential that you go in fully informed about how much it will cost you in the long run. Although credit makes it easy to make immediate purchases when you need or want an item, you should always take into consideration the fact that you’ll continue to pay for the purchase for a number of months or even years after you have bought it. This is an important thing to consider, as you’ll need to take into account the fact that your income or other financial circumstance may be subject to change in the future, and being unable to keep up with repayments could put you in some serious financial difficulty. The fact that lines of credit need to be repaid each month regardless of your financial situation is often the deciding factor for people who settle for saving up instead.
If you’re trying to decide which is best between borrowing money and saving up, you should ask yourself how much flexibility you will need when paying for your purchase. Those who save up are allowed far more flexibility than those who borrow money, as paying a certain amount into a savings account each month is not mandatory as with credit repayments. With saving up, you can also decide yourself how much that you’d like to save each month, whereas credit card and loan repayments are subject to a minimum amount.
When it comes to deciding between saving and borrowing, many people choose to save up as it means that they’ll pay less for their purchase in the long run. Large purchases bought on credit will also charge interest and possibly other fees, which all add up to create an added expense that you never would have had to pay had you bought the item outright. Although saving up for a purchase means that you’ve got to wait for it, many financial experts say that the delayed gratification is worth it in the long run as it means you’ll pay less for your purchase overall and have more money to save up or put towards other purchases. Not only that, but there’s no need to worry about late charges if you miss a repayment.
Which do you prefer to do – save up, or do you tend to make your large purchases on credit? If there’s any particular reason why you choose the method that you do, we’d love to hear from you – leave your response in the comments below.