Even if you are concerned about your financial condition, it cannot be very easy for you to make it better. You do everything – you make a budget, you track spending, you build an emergency cushion, and you cut back on your expenses.
Yet, you find yourself far behind in the race of financial liberty. Well, it is easier said than done to achieve financial liberty. The most important thing that comes in your way to gain financial independence is your borrowing behavior.
The lending market is not novel, and the easy accessibility of small loans has made it difficult for people to be on top of expenses. While running out of money, loans seem to be an ideal option for you. This is why you do not bother about your finances. Borrowing behavior plays an intrinsic role in affecting your financial condition.
Here are the factors that can affect your borrowing behavior:
Psychological trigger play a paramount role to encouraging you to borrow money. Because you have seen a good sale offer, you tend to buy that thing. Even if you do not need that thing, you do not mind spending money on that.
Things seem to be expected as long as you have enough money to pay for your other regular expenses, including debt payments like payday loans on benefits in the UK.
However, problems arise when you start running out of money. It seems pretty challenging to meet all of your regular expenses. As a result, you end up borrowing money to meet your everyday expenses. This can pose a threat to your regular finances.
Since your friends are rich, you want to be rich. You try to keep up with the Joneses. You want to eat at expensive restaurants like them, you want to buy luxurious cars like them, you want to wear expensive clothes like them, and the like.
It is not unusual to keep up with the Joneses. It is the human tendencies that we all desire to have the others have, but it does not mean that you will forget other external factors regulating you – your financial capacity, needs, responsibility, and fate.
Without realizing your needs and financial capacity, you start to compare your life with your friends or those whom you admire, and as a result, you start borrowing money. Borrowing to meet unforeseen expenses is one thing and borrowing to keep up with the Joneses is another.
If you do not stop yourself from comparing with others and adopting others’ lifestyles, you will brutally take a toll on your finances.
There are some external factors as well that affect your borrowing behavior. For instance, when the lending market lends money at lower interest rates, you lower your guards and start borrowing money for all small expenses when you do not have enough money.
This even happens in those cases when it is not urgent to pay them. When people find that they can win rewards on their credit cards, they start making more of its use. They make most of their purchases with credit cards and do not realize that they overspend money that further results in borrowing money to pay off credit card bills.
People who have bad credit can also access online loans for bad credit with no guarantor. This is what influences the borrowing behavior of people. As they take it as an opportunity, they do not stop themselves from borrowing money.
They do it knowing that such options are going to be expensive. Likewise, there are some people who have good credit scores free to borrow money. They think that they can take on debt with ease without affecting their finances. These kinds of external factors play a significant role in influencing your borrowing behavior.
Lack of financial education is one of the reasons why people struggle with poor borrowing. They do not know how to manage their finances, how they can grow their money, the importance of budgeting, and how borrowing works.
Since they do not have much knowledge about finances, they think it is very easy to borrow money. They can easily handle it, whether it is a short-term loan or a long-term loan. Some studies indicate that lack of financial education is one of the reasons people fall into debt.
If you want to borrow money sensibly, you should understand that why you need it. The best way is to start budgeting so you can stay on top of your expenses. If it is still challenging, you should consult a mentor who can help you reach your financial goals and gain financial independence.