How did you learn to manage your finances?

Filed Under Education, Personal awareness, Community, Motivation, young people

Last night I watched a programme where a financial adviser taught a group of 14-15 year olds basic financial management skills. He set them the task of finding the best product to manage a debt and to search the internet for the best deals in insurance. The young people did an excellent job on both counts. Great story.

It struck me that problems managing money come from either ignorance or apathy. The presenter specifically mentioned how although it is relatively easy now to compare deals online many people just don’t bother - and as a result are probably paying too much for their financial services.

But let’s look for a moment about “ignorance”. How did you learn how to manage your money?

I came from a family where, when I was a child, we did not get anything unless there was money available to pay for it at the time. Very occasionally a large or expensive item would be bought on “hire purchase” - with carefully calculated payments.

Did this mean that I managed my own money well when I started work? Well - no. Despite the fact that my first job was in a bank I was always up to the wire on my spending and counting the days til payday. I got caught out by miscalculating how long a cheque would take to clear and had a talking to from the manager of the branch on my responsibilities to setting a good example to our customers.

When they were first introduced I had a storecard and was right to the limit in a very short time soon finding myself only paying enough to pay the interest, never making a dent in the payment of the debt.

But in both cases I knew and understood the implications of my actions.

Fast forward to today. According to the press British people are sinking in a sea of debt and there is a push to have financial education included in the curriculum in school.

I think there are a couple of aspects to this

1 knowing how to calculate the numbers and use the products offered effectively (to your advantage not disadvantage!)

2 taking responsibility for your actions.

I remember a chat I had with a young man who had been in care and had left school and was in his first job. He told me of his shock when he spent his first week’s wages as soon as he got them and that no-one would give him any money to tide him over til the next week.

There was the terrible situation last Christmas where people who had saved with a “Christmas Club” lost their money when the company went under. Why had they not put their money into a bank account? Someone I spoke to said that it was really convenient - the money was collected regularly and - in previous years in any case - they just selected the gifts or vouchers they wanted when the time came. I heard an advert on the radio offering advice to people caught out in the best way to save for Christmas now.

At the other end of the scale my 70-something father only got a credit card a couple of years ago. We advised him to have it for big purchases so that he could get protection should the seller not deliver. He pays off the entire balance the day he gets the bill in so he is not exactly the credit card company’s ideal customer!

Do you have ideas or opinions on effective financial education or a story you would like to share?

Check out the FSA website to see what they are doing to encourage the development of “Financial Capability”

http://www.fsa.gov.uk/

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