Quick Answers

What are smart ways to use borrowed money?

Invest in business growth, education, essential home or car repairs, and urgent bills.

Why are these considered good uses?

They improve earning potential, protect assets, and prevent disruptions to daily life.

What should I avoid spending loan money on?

Vices, luxury items, extravagant vacations, costly parties, or high-risk investments.

Why avoid these expenses?

They offer no long-term financial return and can lead to unmanageable debt.

How can I borrow responsibly?

Only take what you need, choose reputable lenders, and ensure you can repay on time.

When done responsibly, borrowing money can be a smart financial move. A loan can help you fund important expenses that improve your quality of life or provide financial stability during times of uncertainty. Accessing extra funds has also never been more convenient, thanks to digital banking.

Today, modern digital banks like Maya offer faster ways to borrow money without the lengthy approval process of traditional banks. With fewer requirements and quick disbursement, digital loan products such as Maya Easy Credit and Maya Personal Loan serve as practical solutions for those who need a financial boost.

While borrowing money online offers convenience, it’s important to approach it thoughtfully. Carefully managing borrowed funds lets you make the most of these resources and avoid unnecessary stress. In this guide, we'll explore smart ways to use borrowed money and the expenses that are best avoided.

Where You Should Spend Your Borrowed Money

1. Business Expansion

One of the best ways to use borrowed money is by investing in a business. If you run a small venture or are planning to start one, taking out a loan to purchase equipment or open a new branch can be a strategic move. A well-planned investment has the potential to generate income, allowing you to repay the loan while handling day-to-day operations. Whether it’s upgrading technology, hiring additional staff, or increasing inventory, using borrowed money to strengthen your company’s finances can be a sound business decision.

2. Education and Skills Development

Investing in education is another valuable use of borrowed money. Whether you’re funding a college degree or taking certification courses, education increases your earning potential in the long run. With higher qualifications, you can access better job opportunities and higher salaries, making it easier to repay the loan. Additionally, skill development—such as learning digital marketing, coding, or financial management—can open doors to side businesses or freelancing opportunities that provide additional income.

3. Home Improvements and Repairs

Your home is one of your most valuable assets, and keeping it in good condition is essential for maintaining its value and ensuring a safe and comfortable living space. Whether it's fixing a leaking roof or upgrading your plumbing, borrowing money for necessary home repairs can be a smart financial decision. Thankfully, many banks now offer loans with quick approvals and flexible payment terms.

In the case of Maya Personal Loan, you can borrow funds of up to Php 250,000 and pay within 6 months to up to 24 months. Simply access the Maya app, head to the “Loans” dashboard, and tap “Apply now”. You’ll then be instructed to enter your desired loan amount and term to complete the application process. Once your application is approved, the borrowed money will be deposited into your Maya Wallet.

4. Essential Bills and Utilities

Keeping up with essential bills such as electricity, water, internet, and rent is crucial to maintaining financial stability. Missing payments on these necessities can lead to service disruptions, late fees, or even disconnection, which can cause unnecessary stress. So, if unexpected expenses leave you short on cash, consider borrowing responsibly to cover these essentials.

Maya Easy Credit is a great option to help augment your funds when you’re facing unplanned cash flow gaps. This revolving credit line lets you borrow up to PHP 30,000, with a repayment period of up to 30 days. Take note that when you borrow money in the Philippines, it’s best to pay the lender on or before the due date to avoid accumulating late fees.

5. Necessary Car Repairs and Maintenance

If you drive to work or use your vehicle for your business, keeping it in good condition is crucial. Unexpected car breakdowns can disrupt daily activities, affect productivity, and even result in lost income. Whether you’re a ride-hailing driver or need reliable transportation, borrowing for essential car repairs helps keep your vehicle running well.

Where You Shouldn’t Spend Your Borrowed Money

1. Vices and Unnecessary Entertainment

Using borrowed money for gambling, excessive drinking, or other vices is a dangerous financial move. These expenses provide no return on investment and can lead to continuous borrowing to sustain unhealthy habits. Gambling, in particular, can quickly drain finances and result in severe debt problems.

2. Luxury Items Beyond Your Means

When it comes to buying designer clothing or expensive watches, paying for them using borrowed money is an impractical decision—especially if repayment is uncertain. Luxury purchases should only be made when you have extra funds and not when you need to take out a loan. Unlike business investments or education, these items have no income-generating potential and can put you in a difficult financial situation if you’re unable to pay back the loan. Before purchasing a luxury item, consider whether it is a need or just a fleeting want.

3. Grand Vacations You Can’t Afford

Traveling is an exciting experience, but borrowing money to fund an extravagant vacation can lead to long-term debt stress. The joy of a trip is short-lived, while loan repayments can last for months or even years. Instead of taking out a loan for a vacation, consider saving up and planning your trip based on what you can afford.

4. Expensive Parties and Events

While celebrating milestones like birthdays or anniversaries is important, spending beyond your means using borrowed money can lead to financial difficulties. Overspending on event planning services, venue rentals, extravagant catering, and entertainment can result in debt that lingers long after the event is over. Instead, plan celebrations according to your budget and look for cost-effective ways to make them memorable without unnecessary expenses.

5. Financing Equities or Debt

Using borrowed money to invest in stocks, bonds, or other financial products can be problematic when the interest rates on your loan exceed the potential returns on those investments. While investing can offer strong growth opportunities, borrowing at high rates to finance investments can lead to financial strain, as you may end up paying more in interest than the returns you're earning. It’s important to ensure that the cost of borrowing doesn’t outweigh the potential gains from your investments, as this could put you in a more challenging financial position.

Loans can be powerful financial tools when used wisely. Whether for business, education, or essential expenses, borrowed money can help improve your financial situation if allocated properly. However, using loans irresponsibly can lead to financial hardships and debt problems. That said, it’s best to analyze your borrowing options carefully. More importantly, ensure that your financial choices align with your long-term goals.