Money can be a real headache, and not just because we never seem to have enough of it. It’s arguably one of the most important aspects of adult life, and it’s an essential subject to get clued up on.
But many of us only start to do our research into money matters once it’s too late. Do you find yourself frantically Googling how to save - but only once you’re well into the overdraft? Or panic upon realising that nothing’s gone into that savings account since your 18th birthday? Don’t worry girl, you’re not alone.
Because practical money skills aren’t a compulsory part of the school curriculum, jargon-filled guides and credit card application forms can often leave us all scratching our heads. I spoke to Rebecca O'Connor, co-founder of the Good With Moneywebsite, about why our finances can often seem so puzzling.
‘Our stiff British culture of never talking about money is unhelpful,’ she said. ‘It would be so freeing to feel able to discuss money matters with family and friends but because it is still kind of taboo, people who are struggling to manage their money feel they can't reach out until it’s too late.
‘Your parents play a huge role in your relationship with money and whether you view it as something positive or negative. My dad had a “can't take it with you” attitude, and we were always broke. Without a good example from parents, it can take longer to get into good money habits or regular saving, investing and budgeting.
‘There's also a huge need for more personal finance education in schools to help people avoid unnecessary debts early in life, and learn the value of delayed rather than instant gratification - basic things that if you understand early on, will make the rest of your life much easier,’ she added.
So, The Debrief is working with FSCS, the people who protect your money for free in UK banks and building societies to take on the challenge of teaching you what your teachers never did. Read on for your need-to-know on personal finance as we shed the light on common money myths.
Only rich people have savings
Verdict: FALSE
With the rising cost of living, saving can sometimes feel like an impossible dream. But, as the old adage goes, look after your pennies and the pounds will look after themselves. The reason why you might be finding it hard to have anything left over to save at the end of the month is because you should really be putting aside your savings as soon as you get paid. After paying off essential bills and other necessities, set aside a small amount each month before you plan a budget for food/travel/clothes. Out of sight, out of mind: You won’t miss a tenner out of your current account each month, and after a year, you’ve saved £120 without even realising. Check out MoneySavingExpert’s guide to the best savings accounts here.
**People under 40 don’t invest their money **
Verdict: FALSE
This doesn’t have to be the case, and if you’re investing when you can, it’ll set you up for a more secure financial future. If regular direct debits are still too intimidating, there’s an app called Moneyboxappthat rounds up your spending to the nearest £1 and puts the rounded-up amount into an investment account on your behalf. Rebecca from Good With Money said: "It's a great way to start investing, with no hassle at all. Scrap great, it’s bloody brilliant actually, I use it and have saved loads without realising!’
A bad credit rating is for life
Verdict: FALSE
Have you done a credit check recently? If you’ve been left rather disappointed with the result - don’t worry. If you’ve ever missed an overdraft payment and are worried it’ll taint your financial reputation forever, missed or late payments will only stay on your credit file for six years. Don’t use it as an excuse to pay up late all the time, but if you’re in a really tricky financial situation, it won’t stay on your record til the end of time. If you have no idea what a credit check is, it might be worth doing one now. It only takes a few minutes and will give you an idea of what you might need to change if you’re looking to buy a house or take out a loan in the future. MoneySavingExpert have an easy to follow guide that you can try here.
And once you’ve checked your credit, you can do it again and again without it affecting your rating
Verdict: TRUE
Once you’ve checked your credit rating once, you’re likely to want to keep an eye on it more frequently (even if you’re hoping that your score has magically improved on its own). If you’re going to be applying for credit soon, it’s good to check where your rating is currently at. The only thing that’ll show on your report is each time you apply for credit, not how much you’re checking your rating. Each time you apply for a new credit line - like a new direct debit for a mobile phone contract - log back into your account to see where it leaves you credit-wise. Try not to open too many lines of credit at the same time, too: avoid opening a credit card account in the same week you start another line of credit, if you do, it’ll look better on your report.
Getting a credit card will protect my bigger purchases
Verdict: TRUE
Credit cards can be an excellent thing if you know how to use them right. They can seem a bit scary at first, but they offer financial protection for some bigger purchases if used correctly. They can also help you to pay off loans (but you’ve got to know your stuff before taking this option - falling back on repayment could put you in an even worse position). Credit cards offer all kinds of fraud protection, additional insurance and extended warranties - and if it’s stolen, your bank can sort it all out for you. You don’t get that with cash, now, do you?
We’re a generation of renters
Verdict: TRUE (well, for most of us, anyway)
This one’s kinda true - and is likely to remain so for the forseeable future, at least. David Cameron had high hopes for a generation of house buyers, but the government is finally coming to termswith the fact that this might not be the case. It’s not impossible to buy though, and it’s worth looking into the different ISAs available if it’s something you’re factoring in to your long-term plan.
Now we’ve busted some of money’s most common myths, what sites can you bookmark to stay clued up about personal finance? I asked Rebecca for her tips.
"Moneysavingexpert.com is a fantastic resource full of practical tips, but there’s loads out there on the internet to help you,’ she said. ‘If you want a more holistic, inspirational and educational understanding of how money fits into your life, there are some newer websites, such as Money Means and Good With Money, that focus on things like the psychology of managing money and ethical investments - not just the best credit card deals available.’
So, do your research before doing anything drastic with your wages, don’t believe everything you read at first, and we’ll put money on you being the financial expert that your friends will be begging for advice from in no time. But then again, maybe we’ll put that money into our savings account instead.
FSCS has an easy tool that will help you find out how much money you could save now and for your future. It's completely free and will tell you how you could manage your money better in seconds. FSCS are the people who protect your money for free, from £1 up to £85,000 in UK banks and building societies.
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This article originally appeared on The Debrief.