BNPL remains a form of debt, however. If you are low in debt and prefer to save for large purchases and pay for them in full, this is indeed a great tactic. But debt is not inherently bad. It is simply a financial tool that can make large purchases more manageable. As with any financial tool, it all depends on how you use it. Here are some ways to use BNPL in a thoughtful way.
Know what you can afford
Andrew Gold, financial advisor at Prestige Wealth Management in Southlake, Texas, used BNPL’s services to fund major purchases, including travel bookings, business purchases and a new mattress. As someone who frequently discusses expenses with clients, he recommends considering BNPL when you can afford to pay for something in full, but paying in installments would help you manage your cash flow better. Before choosing a payment plan, take a look at what you have in your bank account and how much money you make each month, so you know you can afford the payments as well as your other obligations.
“It’s not for someone who complains about never having money, or who always borrows money from people,” he says. “It’s for people who have a consistent income, who are looking for ways to experience some of the benefits and convenience of breaking a purchase in a matter of weeks.”
Yes, you can rush for the right shampoo and split the purchase into four payments of $ 6, but just because you can doesn’t mean you should. BNPL’s services are useful, but they also make impulse buying too easy when your budget is tight. “We are in a world of instant gratification,” Gold says. “There is a ton of excess and excess in everyone’s life.”