Good vs. bad debt

Credit

Understand the difference between debt that can help your future and debt that may cost you more than it’s worth.

Transcript

There are different types of debt. Some debt will help you build security, whilst other debt will drain your finances and leave you with minimal long-term benefits. Some people make the argument that no debt is good debt. But sticking to this mantra is not always possible. Sometimes, credit is needed to secure yourself a better financial future.

For example, borrowing money may be the only option when you are buying your first home. This is called a mortgage. If you decide to go to university or higher education, you may have to take out a loan. You might also want to start your own business, which again could mean having to take out a loan.

These decisions to borrow are an investment in your future. But as they are large sums of money, always check that you can afford the repayments before you borrow. And make sure you know exactly what they’ll be.

For small items like clothes or a piece of furniture, ask yourself if you really need it. They’re very likely to drop in value significantly, and then you could end up paying more than the item is worth.

When deciding to take on debt, ask yourself if this is an investment in your future or is it meeting an essential need? If it’s not, then maybe rethink. Will your future self thank you for taking on this debt, or regret it?

All Adult Learning Modules

Budgeting

Module 1

5 videos

14 minutes

In this module, you’ll explore how budgeting can help you plan ahead and manage the impact of rising costs.

Woman sitting on a sofa in a bright living room, reading a letter and holding an envelope, with a coffee cup on the table nearby.

Earnings

Module 2

7 videos

16 minutes

In this module, you’ll learn how to understand your pay, spot any issues early and explore the different ways you can increase your income.

Smiling café worker in a striped apron holds a wooden board of sandwiches beside a counter, with customers chatting and coffee and pastries in the background.

Freelance

Module 3

8 videos

29 minutes

In this module, you’ll learn what freelancing involves, from getting paid to managing tax, expenses and day-to-day responsibilities.

Woman wearing glasses works on a laptop at a café table, with a red coffee cup beside her and greenery and large windows in the background.

Pensions

Module 4

9 videos

24 minutes

In this module, you’ll explore how pensions work, from the State Pension to workplace and personal pensions, so you can plan ahead.

Debt

Module 5

7 videos

19 minutes

In this module, you’ll learn how borrowing works, how to manage debt responsibly and where to get help if it becomes hard to handle.

Credit

Module 6

6 videos

21 minutes

In this module, you’ll learn how credit works, different types of credit, how repayments are made and how interest and fees are calculated.

Man sits on a sofa using a laptop while holding a credit card, in a bright living room with white blinds behind him.

Mortgages

Module 7

9 videos

38 minutes

In this module, you’ll learn how home buying works, the factors that shape affordability and how mortgages influence the overall cost.

Couple smiles outside a brick house, holding up new keys, while two children run toward them from the open front door.

Investing

Module 8

8 videos

28 minutes

In this module, you’ll learn how investing works, how to manage risk and how to grow your money over time.

Man with glasses checks his phone at a desk, with an open notebook in front of him and a blurred office background.