Borrowing money

Some Nigerians are used to making very ludicrous financial decisions – like borrowing money to finance a wedding. In 2009, Mazi Elekwachi (not his real name) borrowed nearly N5 million from a now-defunct bank to “throw a befitting burial” for his dead father-in-law. This is something he later regretted because, not only did he find it difficult to repay the loan, he ended up forfeiting his collateral.

Fintechs are encouraging reckless borrowing?

A loan can be a very tricky funding option. This is why I personally believe no meaningful economic progress cab be based on loans; especially when said loans are not properly planned and utilised. Interestingly, it has become very easy to borrow money in Nigeria today, many thanks to the availability of many Fintechs offering quick loan services. This development is encouraging reckless financial behaviour, particularly so among Nigeria’s young working population.

Loans should be used wisely

For the record, this article is not intended to serve as a campaign against loans. Without a doubt, loans have many benefits that have stood the test of time. As a funding option, one can rely on loans to finance a new business idea for instance. You can also carefully use loans to take advantage of short-term investment opportunities. Some parents even use loans to finance their children’s; after all, educating a child is an important investment. Likewise, loans can be used as the financial option of last resort in any given situation, provided that all other appropriate options have been completely exhausted.

Note that the holy grail of wise personal finance management is never to spend beyond your means. Unfortunately, reckless borrowing can encourage reckless spending. This article is, therefore, intended as advice. Below are some of the things you should never borrow money to do. Feel free to consult your financial expert if you have a need for further clarification.

[READ: Investing & Gambling: Differences and Where They Intersect]

Do not borrow to furnish your apartment

While the likes of Stanbic IBTC Bank do offer rental loans, it is absolutely not advisable to borrow money for the purpose of furnishing your apartment. Generally, it is unwise to borrow money for the sake of expenditure. Therefore, unless you are borrowing for the purpose of generating further income or meeting a pressing need, then you have no business borrowing at all.

Borrowing Money

If you cannot afford the money at the moment, then your apartment can be furnished some other time. The most important thing is to have a place you can rest your head at night. Imagine all the interests that will accrue on the loan and the likelihood that you may not even be able to repay as at when due.

Do not borrow to buy a car

This may come across as controversial, seeing as many Nigerians like the idea of owning their own. Most high-salaried individuals are also known to borrow money to finance their car purchases. So, you may be thinking of doing the same. After all, Cheki is known to offer some of the best car loans for Nigerians.

However, sound personal finance management requires that you desist from living a life of luxury based on credit. A car is not a basic need. Therefore, unless you are buying the car to start an Uber business, save up until you can afford to buy one without a loan.

Do not borrow to sponsor a leisure trip

In April this year, Kwikmoney sponsored an advertorial encouraging people to borrow money to travel for Easter holiday. The fact that some people actually bought into the idea couldn’t be more surprising! Holiday loans are financial traps you should do everything possible to avoid. You don’t know to accumulate debt just to travel to a destination for a few days or weeks.  Once again, unless you can afford it now by paying for it, leave that holiday to Ibiza in your bucket list for the meantime. Your time will come.

[READ: Are quick loan banks good or just necessary evils?]

Do not borrow to upgrade your wardrobe

Without a doubt, it is important to look nice. After all, first impression matters a lot as the saying goes. Moreover, the fact that we live in a superficial world means that we get to be constantly accessed based on what designer label me are wearing. But then who do you think are you deceiving when you borrow money to buy those expensive clothes? What would you gain if you wear Gucci suites while your account balance is wearing “zeros”? Let’s be financially wise!

[READ: These are the tips to help you plan a low budget wedding]

Fellow Men, do not borrow money to buy her the most expensive diamond engagement ring!

If your woman loves you for who you are, she wouldn’t care if you go to Katankowa Market to buy her an engagement ring. Love is all that matters, according to Diana Ross. I mean, think about it – why should be fake just to impress your potential spouse? If she won’t accept the kind of ring you can afford to buy without borrowing, then that should tell you a lot about the long-long journey you’re planning to start with her.

Do not borrow money to organise an expensive wedding

In a desperate bid to organise a wedding that will trend on Bellanaija Weddings, some couples go the extra mile by incurring serious debts. And the question that I keep asking myself is this why would anybody even do that? Who are you trying to impress? Do you realise that very soon there will be kids to take care of? It is not cheap to birth a child in Lagos, by the way. Let’s not even start talking about school fees yet… Please, do not borrow any money to host any wedding. Thank you.

You should always concern yourself with how to properly manage your personal finances. Borrowing to spend isn’t a good way to manage your finances. As Chu Achara (a banker) rightly noted, “it is never advisable to borrow money for any purpose other than an investment or a business.”

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