PERSONAL FINANCE 14: WAY FORWARD FOR INDIVIDUALS OR HOUSEHOLDS WITH NO EARNING ASSETS 2

Even if you do not need to borrow to cover Expenses (especially if you are generating a Cash surplus), it is good financial strategy to borrow anyway and pay on time. Borrowing –when you know you can pay on time– establishes your credit rating and improves your credit standing. With a good credit rating and standing, it will be easy to borrow when you really need it.

If you follow the financial strategy of borrowing to establish or improve your credit rating / standing, do not keep the proceeds of the loan in your Savings Account or even in a higher earning time deposit. The combination of inflation and the interest on your loan will erode the value of your savings.

If / when you borrow, purchase an Asset whose value increases over time, e.g., land, jewelry, rare collector’s items, etc.