I think its really important to try to talk to your children about money, not least because if you can give them some idea about the cost of things they have some awareness of value and what it takes to actually earn that amount of money. I was very fortunate as my parents gave me lots of good advice about how to handle my finances and I didn’t get into debt at university or later in life. Although presently we struggle financially as I don’t work, we are lucky to have a nice house, a car and no debt other than mortgage. This lack of debt is completely down to the way that I manage our finances, which boils down to the old adage: ‘you cant spend what you don’t have’. If you remember this and take it to heart you wont find a better piece of financial advice.
TSB have asked me what Golden Nuggets of advice I would give to my children when they were about to set up their own current account. This is what I currently tell them and what I think are the most important ways of handling your finances long term:
- Spend within your means. Even if it means going without something you really want try really hard not to get into debt.
- Save as much as you can from as soon as you can, don’t waste pocket money on stuff you can get for free. Books and magazines can be borrowed from the library, only really buy a toy if you think you are going to play with it lots.
- Think of innovative ways to earn little bits of money. Ask if you can do additional chores for a fee, consider a paper round or shop work. It all adds up!
- If you can, make your own food, don’t rely on ready meals or meals in restaurants, take your own lunches with you. Its surprising what a difference this can make!
- When it comes to buying a house, really stretch yourself as much as you can from the start. You’ll definitely appreciate it later. If you can, overpay your mortgage as this will also make a big difference.
- Shop around for your current accounts and try to understand the impact of different rates of interest on offer. Make use of your maths lessons to learn some practical skills which will help you to understand the different deals.
I’d love to hear of any tips which you might pass on to your children. My aim to to make them socially aware and responsible for themselves and I think managing finances is a very important part of this.