Do you need money? Extra spending space or do you want to make a larger purchase? Then borrowing is an option, but you can also save for it. Save or borrow? What is the best then?
Saving is always cheaper. After all, with a loan you pay interest and after that you also spend a long time repaying everything. If you save, it won’t bother you. In fact, you receive interest on your savings account. Although that interest is very low nowadays. Saving is in any case cheaper than borrowing. But you need patience for this. If you want something, you want it immediately and not in a few months if you have saved for it. Yet this delay is good for your wallet.
Has your washing machine failed and do you need a new one? Or does your car need to be repaired? These are all things you can save for. After all, you know that this will happen by saving, you can already anticipate this. Nibud advises to always have a buffer at hand to absorb financial setbacks. This way you can prevent yourself from getting into trouble and there is actually no longer a choice between saving or borrowing.
But how do you build up a reserve? By saving! It is best to open a savings account that matches your wishes. If you want to build up a financial buffer, it is handy if you can easily access your money. Long-term securing gives a higher interest rate, but if you can’t reach your money then it won’t help you if you need it.
Perhaps you wonder how you can save if you run out of money at the end of the month? Then make a list with your income and expenses. Probably there is still some room left after all the necessary expenses. In that case you can choose to transfer money directly to your savings account once your salary has been paid. This is possible with an automatic transfer so that you do not have to think about it yourself. You choose an amount yourself, as much as you think you can miss. Just because it is directly debited from your account, you will not miss it. And if you miss it, the amount might be a little too large. If you save for a specific purpose, your motivation to save will also be greater. Don’t be tempted to withdraw money from your savings account if this is not immediately necessary. Financial windfalls such as a tax refund, holiday pay or 13th month can also be (partially) transferred to your savings account. Even if you have already saved up a nice sum, just keep saving. When you need it, you also have to supplement it.
Save on your fixed costs
In addition to saving on your savings account, you can also save. Namely on your fixed costs. Check your fixed costs. A magazine subscription that nobody reads? Terminate! Can your insurance policies be cheaper elsewhere? Find it out. Save on your energy bill by another provider but also by being economical in your use. So do not shower for too long, do not leave lamps on unnecessarily, chargers from the socket when you are not using them etc. Do your shopping at a cheaper store and pay attention to the offers and seasonal products. Do you already have a loan? Perhaps your loan transfer is cheaper. Ask your lender about this. All tips that can save you a lot.
Yet most savings can be achieved on your fixed costs. Things like insurance, energy, internet and telephone are being forgotten. While you may have been paying way too much for years. The savings coach helps you to find the best providers for your fixed costs. You can register for free to gain insight into your fixed costs. You can immediately see if there are other providers that are cheaper. And thanks to the saving alarm you will never be late with canceling. By saving, you save money every month. You can use this money to save in order to build up your buffer. The choice between saving or borrowing becomes a lot easier.
Borrow money anyway
Yet saving is not always the answer to the question saving or borrowing. It takes time to collect a financial buffer. Time you don’t have if your washing machine has just been broken or your car needs to be repaired. Or maybe you can start with a very good job that is not accessible by public transport and for which you need a car. Or you want to start your own business and need some starting capital for this. In those cases, borrowing money is sometimes the only option. If you still need to borrow for your purchase, make sure you are well informed. Borrowing money costs money, and you prefer to keep those costs as low as possible and pay off your loan as quickly as possible. The differences can be large, especially with regard to repayments. With many providers you pay a fine if you want to pay off early. This fine is the compensation for the provider for the missed interest. So always check the conditions to prevent you from being committed to a loan for years to come.
In short, when a choice has to be made between saving or borrowing, saving is always cheaper. Make sure you have sufficient reserves to be able to absorb financial setbacks. Do you not yet need a buffer but do you need money? Then borrowing money is certainly possible. Make sure that you borrow responsibly and that you are properly informed about the possibilities and the risks.