Pay off instead of saving! I am not crazy?

 

Or is it? Rather save than pay off a loan and what everyone else does. Just two conclusions from the study on financial behavior and the underlying psychology.

The results were presented at the beginning of March. I always find it interesting to read such studies. We see a lot of behavior in practice every day. But now we also get a look at the underlying reasons. The most important findings at a glance.

32% of the population has difficulty making ends meet

32% of the Dutch population has difficulty making ends meet

One of the first results that struck me is the high percentage of  people who have difficulty making ends meet. 32% compared to 28% who can easily make ends meet.

And the remaining 40%? That is the middle bracket. This group indicates that it is not difficult or difficult to make ends meet. On the one hand, I know that many people are struggling financially. But when I see such a number, I always find it confronting again.

Save money and borrow money

Save money and borrow money

52% of people with a loan also have savings! I was dumbfounded. Why, I wondered. Why don’t they choose to pay off their loan? The interest that you pay on a loan is almost always higher than the interest that you receive on your savings.

The most important reason for not using the savings for repaying a loan is that people want to keep money under control for unforeseen expenses. Hmm, I understand that. Also wise. The Goodbank recommends a buffer of around € 5,000. But I would still advise everyone to take a critical look at something that is not possible. It is a shame if your loan costs unnecessarily much money.

Prefer to be red

Prefer to be red

A few weeks ago I already wrote that being in the red is unnecessarily expensive. Nevertheless, many Dutch people opt for this way of borrowing money. This is also apparent from this study. More than half of the respondents indicate that they are sometimes in the red.

A quarter of this is red every month. If Goodbank asks for the reason for standing in red, 40% say ‘for certainty’. In addition, a quarter say that they never really thought about it, but simply accepted the offer from the bank. It’s a shame, because standing in red costs a lot of money. Once the option is available, there is a good chance that the credit will be used. Avoid standing red at all times!

We mainly live in the now

We mainly live in the now

Seize the day, it seems to be the financial motto. A nice way of life, but when it comes to finances it is wise to think about the future. Respondents chose rewards more often now than later. Because they think they really need it now and it will be different in the future.

Very understandable, but nobody knows what the future holds. That is why I would like to urge you to think about your financial future. Nothing is certain, but try to create a healthy financial situation. Not only for yourself, but also for your loved ones and any children. Seize the day, but do it wisely.

Author: Jay Batson

My Name is Jay has and I have a passion for financial writing. I am the chief writer on this blog. I do my best to verify all the information but if there is anything amiss please let me know and I will do my best to correct it.