Home Budgeting Is it Better to Save Up or Borrow to Buy Things?

Is it Better to Save Up or Borrow to Buy Things?

by James McGregor

We often want to be able to buy things and if we do not have the money there is the temptation to borrow money to be able to get it. This might be an overdraft or credit card, perhaps a store card or even a personal loan. However, there are costs to doing this, so is it better to wait and save up the money before we buy the item or should we borrow? It is worth giving it some thought.

Emergency Purchases

There are some items that we buy because we have to. We either need to pay bills, buy food or have our car repaired, replace a white good or something like this that we just cannot wait for. In these cases we would have no choice but to borrow the money to pay for it as we have no other options. However, in many case we will have a choice and it is worth thinking hard about our options.

Special Offers / Low Stock

If there is an item that you want to buy and it has a restricted time, low price offer, then you might want to make sure that you buy it right away so that you can take full advantage of this offer. You may find that if you wait, the price will go back up and you will never get that offer again. Therefore, if you do not have the money right away, you might feel that it will be worth borrowing it so that you can take advantage. This may also be the case if the item is low in stock and if you delay buying it, you may never get the chance to buy it again. Do be wary of this though as saying an item is low in stock is a marketing ploy that companies might use to try to encourage sales. Make sure that you really are convinced that it is low in stock before you decide to borrow the money to buy it. They may also run offers regularly and you may even find that there is a better one available just after you buy the item, so be aware of this possibility too.

Cost of a Loan

It is worth making sure that you are aware of the cost of the loan that you are taking out. All loans cost money and that cost will vary depending on the specific loan that you decide to get out. It is wise to only borrow the minimum amount, so if you have some savings, use those and then only borrow what you have to so that you keep your costs down to a minimum. It is a good idea to compare the different loans as well. This is both the types of loans, which will vary as well as the different lenders as you will find that the prices will change. This means that it could be well worth spending a bit of time comparing prices so that you can make sure that you are not paying more than necessary. Comparison websites might be a useful tool here, especially if you do not have a lot of time.

Pleasure of Waiting

There can be a lot of pleasure in waiting to save up to get something. If you have spent time and effort saving and waiting before you buy an item it can feel even better to get it than when you buy something right away. You can feel like you have really earned it and that you deserve it. It can be really great to then get the item and know that you worked hard to have it and it will make it much more pleasurable to have and use.

Change Your Mind

If you save up for a long time, you may find that you actually decide that you do not want the item after all. It might be that you find something that is better than the one you had already or that you just do not think you really need or want it any more. This may sound like a disadvantage but what it means is that you will have these savings there ready for when you need to buy something, perhaps if you have an emergency or you just want something in the future. If you did borrow the money and buy the item and then change your mind, you could end up feeling really disappointed as well as cross at the wasted money. It can be horrible repaying a loan for an item that you are no longer using, for example.

It can be a very personal decision. Some people enjoy saving up and do not like the idea of paying extra for their items because they have taken out a loan. However, there are other people that will want the item right away and are just not prepared to wait. It will also depend on whether you will be able to afford to get a loan. Some people may not be able to find a loan that they will be able to afford to repay, as there is likely to be monthly instalments. It is always wise to check out what the repayment expectations are as you will need to repay and it is a good idea to make sure that you are able to afford those repayments before you borrow the money.

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