MULTIPLE BORROWING : FINANCIAL LITERACY TRAINING CAN CURB THIS TREND

 In a certain village I was informed that the residents were multiple borrowers and they borrow to repay loans and at a high interest rate. This situation requires attention because it has a spiral effect on the economy. For example if borrowers fail to pay bank loans it can cause a financial crisis. The financial crisis in 2008 was a result of the irresponsible use of debt.

A bad debt is one where a borrower uses funds for consumption. . In a nation where over 50% of the population is young , responsible use of debt of vital. This is an age group that in most cases is wired to spend( we have all been there and these things are not taught in school). 

Some of the questions to be asked before borrowing include: 

1.The purpose of the loan

2.The interest rate

3.The terms and conditions

4.Loan period

5.The regulator of the institution where one borrows.

HOW TO MAKE GOOD USE OF DEBT

1.Have a clear purpose for borrowing

2.Borrow from a regulated financial institution

3. Have a regular source income

4.Seek financial advice

5.Attend financial literacy trainings

6.Have financial discipline ( A good savings plan)

7.Borrow an amount you can afford to pay

8.Pay the loan promptly.

Debt is critical in society. But it is critical to borrow and use money wisely as discussed above.


Phillip Kiryowa

Finance and Leadership Coach

+256752615916

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