Teaching personal finance

       

Gordon Martin

The UK school system, and many others around the world, are falling behind when it comes to teaching personal finance. Now, don't get us wrong school is very important. But when many of us left school, we found that real life can be tough and there were many things we didn't know. When you're 18, things like filing taxes and paying back debt are not top of your agenda. At school, maybe your only concerns were being able to go out on Saturday while still passing your maths test on a Monday. The role of mitochondria and the laws of the Pythagorean theorem can be useful in your future, what may have more practical value to a large proportion of school-leavers is learning how to make, save and manage your money. Here are some personal finance tips and tricks that we wish we were taught in school.

The truth about debt

Ah, debt. The one thing that nearly every university student has in common. Chances are you never once contemplated the reality of having debt (or what that meant) until you entered uni and were so overwhelmed by the concept that you didn't even know where to begin learning about it. Debt can be a fairly complex topic, but let's just discuss the basics. Is debt dangerous? It can be. Is all debt bad? No. Is some debt necessary? Absolutely.

Attending university without taking out any loans is nearly impossible for the majority of students. Loans are needed to cover tuition, accommodation, food, books, and so on. However, while these loans may be necessary, take them out in moderation and pay them back as soon as possible to avoid incurring large amounts of interest, where appropriate. Not all debt is necessary or even manageable, however; always stay away from high-interest loans like payday loans and try to avoid paying for something with credit that you don't immediately (or in short-order) have the funds to pay off.


Sorting your personal finances after school is key

Credit scores what they are and how you get one

You may have heard your parents talking about credit scores when you were younger, but probably had no idea what they were. A credit score is a numerical value used to determine how good you are at handling your money. For example, a good credit score can be gained by using a credit card and making all payments on time. A bad credit score can occur if you take out a loan and fail to pay it back. Who are the main Credit Reference Agencies in the UK? Well let us tell you:

  • Experian
  • Callcredit
  • Equifax

How to find the best deals

As a university student or recent secondary school graduate, it's important that you're careful with your money. While it may not have mattered where you bought clothes when you were in school because your parents were footing the bill, shopping at high end versus budget stops will make a huge difference to your budget when you're paying for yourself. It's important to find the best deals on nearly any purchase you make as an adult. While it may seem tedious, it can pay off.



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This is the time in your life where you'll likely need to start paying for your own car insurance, creating your own bank account and even renting your own apartment. There are people out there who will try to scam you just because you're young and presumably vulnerable don't let them cheat you out of your money. Do your research and find the best deals you can.

Why you need to check your bank and card statements

Check. Your. Bank. Statements. Regularly. We honestly can't stress this enough. We understand that this can be a painful and dreaded exercise, especially for university students that rarely have much money. However, keeping on top of how much money you have and what you owe on your credit card bill can save you from some serious consequences. If you don't realise your bank account balance is low and you make a large purchase, you could be charged extremely high fees by your bank for being overdrawn, which may make payday loans look competitive! If you owe money on your credit card bill, but are unaware, your interest may increase and before you know it, you could be in a difficult situation. It won't be your favourite thing to do at the moment, but you'll thank yourself later.


Check your bank statement

Make your money last

It would be unrealistic to think that you'll always have an endless source of money at your disposal. This may have felt like the case when you were younger (and making no money of your own), but we guarantee you that it won't be the case post-secondary school. One of the most important personal finance skills to learn is how to make your money last. Here are a few practical ways to save and stretch your money until the next payday:

Making your money last longer largely boils down to finding a budget and sticking to it. The only way to start figuring out a budget is to first determine the cost of your necessary expenses. Note that "necessary" means rent and car payments, not holidays or drinks at the club.

This is the next step in creating a budget. If your necessary expenses are more than the amount you have available to spend each month, then you're in trouble. It means that you'll either need to cut down on expenses or find a way to make more money. Knowing your income can help your money last longer because it solidifies what your budget really is.

You can always make your money last longer when you have more of it. As a student, there are several part-time jobs you can get to make a little extra cash. Consider tutoring, babysitting, dog walking or even becoming a waiter at the local restaurant.

That pair of new shoes in the window of your favourite shop may look irresistible, but they are, in fact, resistible and should be resisted. It's impossible to make your money last if you splurge on unnecessary items throughout the month

We get it streaming services may seem like the best invention since sliced bread, but how often do you really use it to watch series? If you only use a service once in a blue moon, it may not be worth the monthly fee. Cancelling subscriptions that you no longer use can help your money last much longer.

Cook more

As a university student? Surely, we must be joking. Hint: we're not. If you don't know how to cook or are accustomed to going out for most meals, cooking more often may seem like an impossible suggestion. However, it's the best way to make your money last longer. You may not realise how much you spend on takeaways, but we can assure you that it's likely much more than you should be spending. Cooking more often can cut down on expenses and also make you healthier!

Go out less

Let's not kid ourselves going out for a drink is costly. In most towns and cities, a pint will set you back £4-5. A few drinks and the necessary late-night snack after a night out can make a serious dent in your wallet. We're not saying to quit going out altogether, but why not spend one or two weekends in the month drinking at a friend's house instead of out at the pub? And if you do decide to go out, try to find places that offer deals for students.

A 9-5 job isn't your only option

It's 2018. We are truly living in the digital era. No longer is a traditional 9-5 office job your only option to make a steady income. More and more employers are offering work benefits that include flexible hours and work from home options, but that's not all. If you're not a fan of working for "the man", then you don't have to. Do you have a skill that you can provide as a service like graphic design or content writing? There are increasingly more people becoming their own bosses by working as freelancers. While this may not provide the stability of a 9-5 job (at first), it gives you the freedom to choose your own rates, decide which projects to take on and make your own work schedule.

Maybe you don't have a special skill, but you have a killer business idea. Make it a reality! There is so much information available online about how to start your own business and, while it may be a mission to get off the ground, small businesses are growing in popularity. There are ways to take control of your own finances that don't involve following the crowd; you can take the road less travelled, follow your passions and work for yourself.

Conclusion

At the end of the day, they may not have taught you proper personal finance in school, but it's not too late to learn. Being able to properly manage your money is one of the most important skills to have, it will ensure that no matter what happens in your life financially, you'll know what to do. Whether you're a uni student or recent graduate, hopefully these personal finance tips and tricks can help you get a head start on taking control of your finances.

Why not get in touch with us about your thoughts on teaching personal finance in schools. For more information visit this page.

Being armed with good information helps you make good borrowing and investing decisions. We help you with this with our commitment to responsible lending.