Answer:
Explanation
• You could borrow money if you want to buy an expensive item that is part of your long term plan. A house is a good example. Very few people can save enough money to buy a house. ... Therefore, to borrow money to buy shoes does not make sense, because the shoes might be worn out by the time you have paid off the loan!
WHY A PERSON NEEDS TO BARROW MONEY?
• Different people have different notions of debt and borrowing. While someone might consider it okay to borrow money for all things big and small, others might be strictly against the borrowing of any sort. However, certain situations in life leave no option but to take a loan. Similarly, the widespread misconception that taking a loan is not good for your finances couldn’t be farther from the truth.
The truth is that debt, when used correctly, can help you in many ways – like helping you grow your business, get you or your child quality education, help you buy a home that you always dreamt of, improve your quality of life, and invest in a lucrative business opportunity.
However, if misused, a loan could also get you trapped in a vicious debt cycle that can be hazardous for your financial health. Thus, it is important to remember that some debt is good as it helps you in your economic growth and also to save money, but the wrong kind of debt can be debilitating and cause a lot of harm to your financial plans.
That is why, before you borrow an amount, ask yourself if the expense is justified and whether you are in a position to repay it on time. As long as you are clear about your short-term and long-term financial situation, there is no harm in borrowing money.
