Financial literacy is a critical skill, yet many people find themselves in dire straits due to poor financial decisions. Let me share the story of a young man from Meru, Kenya, who found himself in a desperate situation after taking a loan for a risky venture that didn’t pay off. His plight is a reminder that loans, though useful, should only be taken with clear and calculated plans.
Here are 11 things you should never take a loan for—not because loans are bad, but because these decisions can lead to long-term financial struggles:
Betting, Gambling, or Playing Lotto
Gambling is risky enough without adding borrowed money to the mix. Never stake what you can’t afford to lose.
Paying Rent
Taking a loan to pay rent is a financial trap. Paying off a debt for a house that’s not yours is unhealthy and unwise.
Unnecessary Medical or Cosmetic Procedures
Bleaching, cosmetic surgery, fad diets, or libido enhancers might feel essential at the moment, but they can drain your finances for fleeting results.
Christmas or Birthday Presents
Don’t borrow to impress. A small, heartfelt gift is better than an expensive one financed by debt.
Flossets (Fake Assets)
These include items like cars, trendy furniture, or gadgets that depreciate in value. Appearances can be deceiving—don’t look rich while drowning in debt.
Vacations
While vacations are tempting, taking a loan to post hashtag#Vacay photos isn’t worth it. Instead, build a life you don’t need to escape from.
Weddings and Dowry Payments
Simple weddings often spiral out of control, leading to unnecessary debts. Start your marriage with love, not loans.
Business Experiments Without a Plan
Taking loans for speculative or poorly planned businesses can lead to failure and financial loss. Always validate and research thoroughly.
Peer Pressure Purchases
Avoid buying items to keep up with others. Debt for approval is a cost too high to bear.
Unproven Investments
Be cautious with investments that promise quick returns. A bad call could leave you with nothing but debt.
Lifestyles You Can’t Sustain
Living beyond your means is unsustainable. Don’t use loans to fund a life you can’t afford.
Loans are tools—not solutions for every problem. Be smart, plan well, and avoid these pitfalls to ensure financial stability and peace of mind.