The Complete Guide to Borrowing Money

It sometimes gets a bad rap, but borrowing money isn’t always a bad thing. April is Financial Literacy Month, making now a great time to learn how to borrow responsibly.

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One of the five key principles of financial literacy — in addition to earning, saving and investing, spending and protecting — according to the Financial Literacy and Education Commission, understanding the basics of borrowing is essential. There are plenty of reasons to borrow money, including buying a home, purchasing a car, investing in your education and paying off debt.

In 2020, consumer debt reached a record-high $14.88 trillion, according to Experian. Taking a closer look, the average consumer had a total debt balance of $92,727. For the total consumer debt amount, this is a 6% increase from 2019, serving as the highest annual growth recorded in more than a decade.

Whether you’ve already taken on debt or plan to in the future, it’s important to borrow money wisely. Knowing the basics like how to build good credit and understanding APR can help you make positive financial decisions.

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Ready to learn how to borrow money in a manner that allows you to stay financially healthy? GOBankingRates is here to educate you on borrowing responsibly.

Take a look at our guide on borrowing:

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About the Author

Jennifer Taylor is a West Coast-based freelance writer with more than a decade of experience writing about anything and everything. Since earning her MBA, personal finance has been her favorite topic, as she’s passionate about writing stories that educate, inform and empower. Specifically, she specializes in budgeting, debt repayment, savings and retirement.
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