Strategies for wise borrowing

Strategies for wise borrowing

Strategies for wise borrowing

Borrowing money is like meeting a new dog. One is never quite sure whether it is going to lick your hand or bite you in the butt! Be informed, be careful and work out a strategy before making a decision.

Have a strategy in place

All of us need to borrow money at some point during our lives, be it from a friend, a family member or a credit provider. Borrowing money enables us to pay for things that we otherwise would not be able to afford, for example a house or a car. It is, however, very important to have a strategy when it comes to borrowing, and not get caught in a debt trap that will take many years to undo and will cost a lot of money.

Remember to:

Pay cash when you can

In today’s world of instant gratification, it is very difficult to put off buying an item until you have enough money saved up to actually buy it. What often happens is that you get a credit facility with the store and get the item you want immediately, even though it does not belong to you until six months and usually a lot of interest later. Be aware that borrowing money costs money, so rather try to save up and buy the item later when you can pay cash. A good rule to follow is if you can’t afford it, you probably do not need it.

Know your credit status

Should it be necessary for you to borrow money, make sure you know how much you can afford to pay back every month. Be aware of all your monthly repayments, so that you do not end up battling to have a decent lifestyle because you are servicing too much debt. Also, DO NOT borrow money to pay off other debts.

Shop around

When you decide to borrow money, do not just sign up with the first company that offers you a loan. Shop around. There are many credit providers out there who may be willing to give you better terms on your loan. It is very important that you understand the terms and conditions of your loan, and never sign a document that you do not understand. If the terms are “too good to be true”, they probably are!

Pay back more than your monthly instalment

Once you have borrowed money, try to pay more on the loan than the minimum instalment. In this way you will be able to pay back the loan quicker and it will cost you less in interest.

Biggest borrowers in the world

According to the World Bank, South Africans were the biggest borrowers in the world in 2014.
Credit is not necessarily a bad thing, if you use it wisely and carefully. It can, however, very quickly turn around and become an enemy if it is not managed with the utmost care. Just ask the many millions of South Africans who are presently struggling to pay back their debts!


Erasmus, S. 2015. South Africans world’s top borrowers. Retrieved from:

Morris, H. 2013. The best and worst ways to borrow money. Retrieved from:

Reviewed by M van Os