Question

Instead of borrowing money for large purchases, you should set money aside in a sinking fund over time and pay with cash


True

False

Answer 1

True.

Setting up a sinking fund (saving gradually for planned large purchases) avoids paying interest, keeps you debt-free, forces disciplined saving, and reduces financial risk. Exceptions exist — sometimes taking low‑cost financing or borrowing for investments (e.g., inexpensive mortgage, certain business or education loans) can make sense — but as general consumer advice, saving and paying cash is the safer approach.