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Buy Now, Stress Later: The problem with paying in instalments

 

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It’s never been easier to spend money. The rise of the Buy Now Pay Later (BNPL) industry has been astronomical, and whilst there are plenty of news articles proclaiming the imminent regulation of these companies, from a personal perspective it feels like services such as Afterpay have become the norm for young people.

They have become a guilt free way to pay for items we once couldn’t afford, or things we would have to save for.

They allow those of us who haven’t always had access to new or expensive things the ability to grasp them, to own them.

This is, until the inevitable repayments begin, and the guilt, stress and buyer’s remorse come flooding in.

This isn’t to say that Buy Now Pay Later schemes can’t work as a positive tool for managing our spending and getting a taste of the good life, but I’m confident in guessing that for those of us who grew up wanting for a bit more than we could ever afford, schemes like Afterpay can become a complicated cycle that can be hard to get a grip on.

A cycle of stress

 

The cycle I’m talking about here is all too familiar for many young people, and increasingly with families trying to get a leg up.

It starts with one or two purchases, maybe it’s something you need or something you’ve wanted but couldn’t afford, your income doesn’t quite cover it and you don’t make enough to save up, so you break it into a few (supposedly simple) payments. This feels like a real relief, you’ve got the thing that you want or need most, and you still have money for the other essentials, it ends up making the item or service you have purchased feel cheap… to start with.

After a while this feeling makes it easier to continue putting things on your Buy Now Pay Later account, until one day you have to begin repaying those items.

Alright, you knew this day would come and you’re sort of prepared for it, but then there is another repayment, and then another the day after. The stress sets in, where is all of your money? You haven’t been buying anything new.

This is one of the most difficult aspects of these services, the initial rush of the purchase is actually not the simple thing it once was, it is now a slow burn and the only way out is to pay your way, attempting to avoid the late fees that come with a missed payment.

Some things to think about

 

So, what is the answer? Like all things in life (particularly in finances) there isn’t one simple one, but there are ways we can make the system work for us. If you’re using BNPL, one way to do this may be to make sure you’re not racking up too many purchases at once. The payment dates and the costs are always going to come back when you least expect it.

It could also be worth considering keeping it to one or two purchases at a time, making sure to pay things off before you move onto the next item, this way we can anticipate when repayments are due and that they aren’t going to eat into our day-to-day living money.

Here’s the big one, figure out if it’s even right for you in the first place. Whilst Buy Now Pay Later services have become so normalised in shops and in society, they aren’t going to work for everyone, we all have different methods of managing our financial wellbeing, and for some people it’s best to leave them be.

Life is complex enough, ask any young person, sometimes there’s no need to make it harder on ourselves.

Like every article on TomorrowMoney, this is not personal advice. If you need to speak to someone for free about spending or debt, you can call the National Debt Helpline on 1800 007 007. If you need free legal help, you can speak to Mob Strong Debt Help on 1800 808 488.

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