Life happens – and that’s true for everyone. Even if you have saved money for spending and retirement, you may still need to borrow for special occasions. Not all reasons for borrowing are bad, and borrowing itself can be done intelligently if you’ve already planned a budget!
Reasons you may need to borrow include:
- purchasing a house;
- a child or family member starting university;
- purchasing a new vehicle;
- undertaking a major home renovation; and
- paying for a wedding.
The cost of any of these could feel daunting. However, if you have a budget plan in place, you already have a good idea of your expenses and cash flow. You can make informed decisions and even adapt your budget as changes happen. A Retirement Information Consultant can also discuss with you how debt affects your retirement planning.
If you begin to feel overwhelmed by debt, we’ve talked before about different debt management strategies like the avalanche or snowball methods.
As always, it’s important to remember that you should:
- never use credit to pay for credit;
- have conversations about your financial priorities before you borrow; and
- look at your budget plan regularly to check it’s still working for you