Final answer:
True, delaying purchases until funds are available is an alternative to payday loans, which is part of good financial management. College students and others often need credit for education, homes, or business investments. Responsible credit use and the confidence to repay can shift financial demand.
Step-by-step explanation:
True, one alternative to payday loans is to avoid borrowing until you have the funds to spend. This strategy can be a part of a larger financial health plan, which can be improved by paying all your bills on time, and by not using too much of the credit that is available to you to spend.
However, it's important to note that building an emergency fund can take a considerable amount of time and may be depleted quickly. Despite the potential benefits of waiting to spend until you have the funds, situations may arise where credit is needed.
For instance, college students often require money immediately for educational expenses when their income is low or nonexistent. Therefore, they borrow and create demand in financial markets with the expectation of repaying these loans once they are employed post-graduation.
Credit acquired responsibly can assist in purchasing significant items, such as homes or automobiles, and is crucial for businesses seeking financial investment for long-term projects. When there is greater confidence that the borrowed funds can be repaid in the future, the quantity demanded of financial capital may increase at any given interest rate.