There is an old phrase of ‘neither a borrower or a lender be’ which many people may have heard their grandparents saying. It is a rule that many people lived by but it has unfortunately made many people scared of debt. It implies that you should never lend or borrow if you want to be happy. Following these rules may seem sensible but actually are not at all practical for modern life for a whole lot of reasons.
Lending money is something most of do all of the time without even realising it. When we put money in the bank, we are effectively giving it to the bank so that they can lend it out to others. However, there is very little risk in this type of lending. Some people invest money in peer to peer lending and so do directly lend money that way. Some people lend money to family and friends.
It is probably this last type of lending which the old proverb refers to and it can be problematic. Lending to friends or family members can have an impact on your relationships with them. It can lead to you having disagreements about repayments. It may even cause you to fall out completely. It could also lead to problems with your relationships with other family members who might get jealous about you borrowing money and them not having any. Particularly if they ask to borrow money and there is none left for them as they have had it all. However, there are also advantages to lending this way as it could improve relationships and enable your friends and family to improve themselves so you will need to give it a lot of thought.
Borrowing money is something that many people do these days. If you want to buy a house or go to university, chances are that you will need to borrow money in order to do so. This means that by not borrowing money, you could actually be holding yourself back in life. It is something that many people do not really understand.
It is easy to panic when you think about borrowing; to worry about getting into unmanageable debt and to not be able to cope with it. Obviously this does happen to some people and it is something you need to be wary of but it is not something that will necessarily happen to everyone. There are certain steps that you need to take when taking out a loan which will help you to protect yourself against this. You need to make sure that you really need the loan, that you are only borrowing the amount that you need, compare lenders to get the best deal for you, ensure you can afford the repayments and do not look at it as an excuse to borrow more and more money without good reason. Many people manage debt really well and it allows them to improve their lives by being able to own a home rather than rent, which can often turn out to be cheaper and to get an education in order to be able to earn more money in the future.
There are other types of debt which can be beneficial as well. Maybe your car has broken down and cannot be repaired and you need one for work. If you have no savings then you will have to borrow the money to buy one. As long as you make sure that you get the best loan for you, do not borrow more than you need and ensure you can afford the repayments, then you could end up with a car which will allow to keep your job and be able to manage the loan.
There are also some loans which are not worth having. Such as, if you want to borrow money to buy things that you can do without, could not afford the repayments and do not research properly to see if there are cheaper options. Loans are sold to us in the same way as other goods and they can seem like a normal thing to regularly use to pay for day to day things, but it is wise to think hard and only use them when necessary.
Therefore we should not avoid all borrowing and lending but just think very carefully about it. We need to make sure that what we are doing will help us to improve our situation, will not cause us financial problems and that we are not paying more than necessary. It is worth spending a lot of time researching and thinking before borrowing or lending any money, but it could lead to a positive outcome if we do it. Think carefully about the benefits both long and short term as well as the risks and this should enable you to be able to make a sensible decision. Never go into it without doing this as it is more likely that you will make a decision that you will regret if you do.