My first memory of money management was taking my little navy blue TSB savings book into school with a bit of change to submit to my savings account. I don’t recall anyone explaining what happens to the money whilst someone else is looking after it. I don’t remember interest being explained either. And I certainly don’t remember anyone giving me any future projections about what it would mean to continue saving 40p a week for the next 20 years. (£416 for reference lol)
But to a five year old that sum would have sounded like such a huge amount of money and inspired me to keep saving. Instead I soon cashed in and I don’t even remember what for so wasn’t even for anything special! There have been so many occasions, especially in my twenties when an emergency fund would have been so useful. Without this though, I just got smart in making more money when I needed to.
Sadly this hasn’t always been practical. When I was in my first own home I suffered an injury to my knee and couldn’t work for a while – this was in times before online incomes were available so I couldn’t earn any extra from my bed. An emergency fund would have been perfect to see me through this time.
Further down the line when I got my first job at 16 I opted into the pension scheme straight away because I was told “its a good idea”. But no-one explained why it was a good idea! So of course, when I found myself a bit skint one month, I cancelled my pension payments so I would be £30 better off each month and felt like it was a pay rise. What I was actually doing was just stealing from my future self 🙁 Thankfully a few years later I started paying into my Local Government Pension Scheme and haven’t looked back. It is just a shame that I missed out on a good few years of contributions at the start of my working career.
Then came paying for university and fortunately I didn’t need to pay fees but I was bombarded with letters from the Student Loans Company getting me to apply for the cost of living loans. All of which I didn’t need but apparently it was going to be “the cheapest loan I could ever get.” So I fell for the marketing and took the loan for each of the three years. All £12000 of it! No explanation of the interest rates was given. Certainly no warning that interest rates could change!
What would have been even better is being shown how to budget, given tools to manage my money myself and not rely on these loans what have turned out to be actually very expensive handouts.
All the above aside, the biggest failing of financial education I suffered was not being encouraged to take financial risks. I was brought up in a time where bank loyalty was seen as a good thing. It has taken me 34 years to pluck up the courage to switch current accounts! Even with the incentive of £175 for switching, my move was full of fear and anxiety.
I’ve always had some Premium Bonds but that was because the money is safe there, being backed by the treasury. Except it is the interest gained which is the gamble so instead of being taught about stocks and shares ISAs etc, my money has never really grown to its full potential.
If I had known 15 years ago how simple self assessment is I would have most definitely started my own business a very long time ago. When I first started blogging I TURNED DOWN WORK! I can’t believe it either! But I was scared to earn an income from my own business. I just didn’t know what to do and that lack of education was preventing me grown my business.
I think this is one of the reasons why MLMs are so popular. They remove all that fear and inspire people to make money and all the tax part is taken care of them. I do not support MLMs and definitely don’t condone their recruitment tactics preying on vulnerable (mostly) women. However their business model for the top level is really smart.
What I wish I had experienced when I was younger was the opportunity to speak to small business owners, get an insight into the reality of working for myself and then someone to push me that bit further to take the leap in to working for myself.