Afterpay ... dangerous or a great budgeting tool?

In a world where we can communicate without speaking, send coordinates of where we are at the drop of a pin, find something that’s lost by pinging it … it’s no wonder we were going to evolve to ensure we had what we wanted to buy long before we had to pay for it, without the upfront commitment of interest like a credit card arrangement … enter Afterpay.

Afterpay … the new layby system of our time modified to cater to the age of instant everything.  For those who aren’t aware of what Afterpay is, it is a payment system that allows consumers to receive their goods now, in exchange for a direct debit commitment of fortnightly payments over 4 equal instalments, completely interest free.

That is of course, if you adhere to the terms and conditions, what could go wrong?  Perhaps everything, perhaps nothing.  In thinking about the premise on which Afterpay is built, I’m a huge fan of the system.  What’s not to love about it?

First and foremost, I can have my stuff now … I’m a “I need it now kinda gal”.  Secondly, the payment arrangement excludes any cost to me whatsoever. And lastly, there is no second guessing the arrangement .. the payment plan is set and not negotiable and is connected to a direct debit to your account, so it’s all taken care of for you.

And my favourite part … it can be easily budgeted for as all the information is known.

So why does it go so wrong for so many people?  The lack of managing the responsibility that comes with the power of using it as a financial resource.  You see, just because something is available to you, doesn’t mean it’s right for you. 

A financial strategy such as Afterpay can only be successful if you employ some simple techniques when using it;

1.     Live within your means

Whilst you have been approved to utilise Afterpay, doesn’t mean you don’t have to ensure that your purchases are still made with repayment in mind.  You need to be able to service the debt.  Don’t forget this!  So if you can’t, either don’t make the purchase, or make it at a later date when you either have cleared the balance a bit, or paid another contract of an Afterpay purchase off.  Therefore, incorporate it into your budget and have full understanding of the financial impact it’s going to have on your available funds at the time the obligation falls due.

2.     Don’t use it as your only financial source

Reliance on one financial strategy can present its own set of problems.  So when thinking about using Afterpay for any purchase, ensure you understand the impact of this financial resource side by side with other means of financial support in your business to ensure it fits in.  Afterall, with any financial instrument comes obligations … know them.

Whether you use Afterpay or not as a financial source, be sure to understand the implications between how you use it, when you use and what you are using it for.

Happy shopping x