Credit, or money lending, provided that this money is later repaid in one installment or in several monthly payments with additional interest is a financial instrument that people can use in different situations. However, although the credit itself, as a service, is not bad, people are often unable to handle it and often borrow too much, and then are unable to repay the money in time and fall into even greater debt. Such a situation is not uncommon, and basically any type of credit can be used negligently, so let’s look at what makes people take too many credits today, and why do people generally not handle these loans?
Low financial education
- One of the biggest problems why people borrow too much and do not think about the consequences of these borrowings is the small amount of education in the economy and other sciences related to money and finance. Children should learn the value of money from a young age, as well as all these other concepts, such as investments, credits, companies, etc. Such people would understand how money is generated, how this money is distributed, and how the credit is earned, issued, and who are the real beneficiaries of all these transactions. Nowadays, the secondary school has only a superficial economic course on some of these things, but, in my experience, it certainly teaches too little and definitely that a much more in-depth course is needed for children to learn all these things and be full members of our capitalist society. If money and finances were not so useful in today’s financial market and financial transactions, then it is definitely enough for people to have the current level of training. But as the world economy shifts around money, credit and investment, people should understand all these things to be productive and good to live, make money and achieve financial independence.
- Of course, the credit lenders themselves, which make up various marketing campaigns, advertise their offers and let them freely get to everyone’s fault. But here we have to think about what an alternative would be, because if these institutions started to decide for themselves who to give and who did not give credit, it could be seen as a violation of human rights and definitely that many would not like it again. In essence, credit institutions have been given the task of not giving credit to people who are unable to repay them, and although the Banks are rather modest and are trying to do so, money-based private creditors often give credit to anyone who wants it. The ads of credit lenders were already limited in Latvia, and the offers where a loan was given with a gift were also limited, however, interest-free loans and other similar services still exist and they definitely entice people to get these loans.
- And the third, but perhaps even the most important, point is that people have not been taught and they have not learned to build their own willpower, and basically taking credit is itself the easiest way to go. Every time you take a loan you are essentially receiving a service or commodity that you cannot buy at the moment, and instead of collecting money you take the loan and then slowly repay the loan. If people learned to use their willpower better and say “train” then it is definitely not that there are so many loans in the world. We all have problems with the use of our willpower, where no one else can refrain from having evening sweets there, another is unable to force himself to sport, but most of us are unable to force ourselves to save money and take credit for everything we get casual!