Peer pressure are some of the deterrent factor for us to exercise
prudent spending. Since childhood we have been told by our parent to leave
within our means.
To stay connected with our peers we buy things which often
bring our status to be on par with our colleague to find out later that it was
not a necessity to us.
It is because of such choices that resulted younger people
get entangle with bankruptcy action within early career life despite acquiring
high academic qualification.
In this respect, excellence in academic qualification is not
a full proof defence to overcome from being overwhelm with debts.
It is reported that significant number of defaulters
resulted from personal loans, hire purchase and credit cards. On closer look,
this are considered as short term loans tempting to resolve short term interest
but have great future consequences if repayment capacity remain unstable or at
worst income stop flowing due to loss of job.
Borrower in this case is being misled to believe that they
have the means to sufficiently cover their repayment since financial institution
approved their loans. However, they fail to comprehend that the benchmark administered
by the bank in the financial assessment where loans repayment remain below 30%
of gross income earned, considered as acceptable borrower.
Matters can easily get out of hand when borrower, fail to
account their true expenses and other financial obligation, let alone maintain
savings as cushion on rough times.
So, being prudent is actually exercising frugal spending
even when you are not facing stretch in your income.
As the saying goes, a pound saved is a pound earned.
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