For example, taking up a student loan means you will repay it in the future. The hope is that attaining a qualification will enable you to get a job and be able to repay the loan.
Before jumping into debt, it is essential to conduct a self- assessment of your financial well- being by following the steps below.
Have a reasonable attitude – check if you have a monthly budget. Without a monthly budget, you are not in control of your finances. Remember, a budget is an indicator of whether or not you live within your means. In my opinion, jumping into debt without the habit of drafting a regular monthly budget could have negative consequences in the long run.
Is there a need? – Borrow money for a specific reason. It is not advisable to take up debt for an unintended need or purpose. Having a specific need will help you commit to repaying the loan with a clear conscious that the money was used for a planned purpose.
Understand a credit agreement – Some people are quick to put down their signature before going through the credit agreement, which is not a good idea. Before signing the loan agreement, be aware of the total loan amount, the interest rate, monthly instalments due and the loan term. If you are not comfortable, ask the consultant to take you through the agreement and explain even the finer details before signing.
Following the steps will help you be financially literate and give you the power to manage debt effectively and efficiently.
– Sibusiso is a professional in the financial services sector in Carletonville.
