Incorrect money management strategies can lead you into trouble, starting from unpaid student debt and leading to loans based on the never-never, with the false hope of using one loan to pay off another.

Teach yourself a new attitude towards personal finance and living off overdraft, and you will be able to stop that debt snowball before it gets too big.

A common problem faced by many families here is that of living in overdraft. We may wonder how so many households ended up this way, and the answer is what could be termed the “borrowing mentality.”

Living in overdraft, which effectively means that you are borrowing from the bank, is just one feature of this “borrowing mentality.” Another symptom is the constant borrowing from loan funds. When these are over-used, a family can sink into huge debts and can even end up using one loan to pay off another, never getting out of the cycle of ongoing expenses.

So how do we get out ourselves of the “borrowing” mentality and how do we educate our children so that they will not fall into it when they grow up and become responsible for their own finances?

The cardinal rule is: If you don’t have the money to spend on something, don’t buy it! Taking out an advance on your paycheck, borrowing from a neighbor, or putting it on a credit card does not create funds that don’t exist. All it means is that you may have obtained the item you wanted, but you will still have to pay for it afterwards. And unless you have the money to cover it, the debt will not go away overnight.

Money EatsCredit: Image: worradmu /

If you teach your child that if he wants to buy something, he should either spend his own pocket money, do some babysitting or a newspaper round to earn the cash for it, or not buy it all, you are teaching him an important lesson that will prevent him from sinking into the “borrowing” mentality.

But what about an unexpected emergency? This is where your emergency fund comes in. Open a monthly savings plan, into which you pay a set sum each month and from which you can only withdraw at certain times – once a month or once a week. Don’t touch this money, but leave it for the proverbial rainy day. While it may not earn as much interest as other investments, it will still grow a little and it is accessible for emergencies. And by building this emergency fund, you will not need the overdraft or a loan, saving you from the terrible spiral of debt.


Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.