Credit: 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 a 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?

Docs, Links & Resources

Related Resources go here…

All Adult Learning Modules

Budgeting

Module 1

5 videos

13 minutes

In this module, you’ll learn how to build a budget that helps you stay in control of rising costs, plan ahead and manage your money with confidence.

Woman sitting on the floor in a bright workspace, using a laptop with mood-board notes and minimal décor behind her.

Earnings

Module 2

7 videos

15 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.

Freelance

Module 3

8 videos

28 minutes

In this module, you’ll learn what freelancing really involves: from how you get paid and find clients to how to manage your money, taxes and day-to-da

Pensions

Module 4

8 videos

22 minutes

In this module, you’ll understand how pensions work, so you can plan confidently for later life.

Debt

Module 5

7 videos

18 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

20 minutes

In this module, you’ll learn how borrowing works, how to avoid problem debt and what to do if you’re feeling overwhelmed.

Mortgages

Module 7

9 videos

37 minutes

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

Investing

Module 8

8 videos

27 minutes

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