Why do people borrow?

Lesson 1 of 12 in our free Borrowing guide: a 5-minute money game with the key points below.

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The story so far

Dex: Debt is just leverage, bro. Rich people borrow. Therefore borrowing makes you rich. Checkmate.
Nana: Dex, you borrowed £40 off Mo for a vape and called it 'leverage'.
Mo: I'd still like that back, by the way.
Chip: Borrowing = using future-you's money today. Sometimes smart, sometimes a trap. The trick is knowing which.

Nana's rule of thumb: what's the FIRST question before borrowing anything?

Can I afford the repayments AND still cover essentials?. Yes. If repayments would squeeze rent, food or bills, the loan is a problem in disguise.

Spreading the cost of a laptop you need for your course, with a plan to repay → Could make sense. A real need plus a repayment plan. Still check the total cost and cheaper options first.
Borrowing to pay off another loan's repayment this month → Red flag. Borrowing to repay borrowing is a classic debt spiral sign. Free debt advice exists for exactly this.
A festival ticket because 'everyone's going' → Red flag. FOMO is not a repayment plan. Save up for it instead — the festival will happen again next year.
A boiler repair in winter when your emergency pot is empty → Could make sense. A genuine essential. Look at the cheapest option, and check if your energy supplier or council has help.
Borrowing to buy crypto 'before it moons' → Red flag. Dex energy. You'd owe the full amount plus interest even if the coin goes to zero.
Myth: “All borrowing costs the same, it's just money.” — The cost varies massively — from 0% to some of the most expensive credit there is.
Fact: “When you borrow, you usually pay back more than you borrowed.” — Interest and fees are the price of borrowing. 0% deals exist, but often have conditions.
Fact: “Missing repayments can make it harder to borrow later.” — Missed payments show on your credit file, which lenders check.