Financial experts top tips
Make sure the ‘books balance’ – in practice, don’t spend more than you have coming in. Seems obvious but the wide availability of credit - whether credit cards, catalogues, store cards, etc - means it can be tempting to delay paying for things, but then it mounts up. Saving up for things and buying outright where possible means you avoid this trap.
Save a portion of your income every month. The amount you save will depend on your individual circumstances and financial goals, but its about creating good habits and it all adds up over time.
All the advice I was given growing up was about ‘now’ money. Things like “If you haven’t got the cash for it, you can’t afford it.” And “Put something into your savings whenever you get new money.” This is all good advice, but I could also have really done with something along the lines of “Make time to understand about your pension because no-one else is going to check that you’re putting enough in throughout your life if you don’t”.
I think the best piece of money advice I have ever been given was to contribute to a pension myself from 18 (outside of any company contributions and within limits of course!), even if it was to start off as a small amount, which it was, and then increase that contribution with any subsequent pay rise equivalent, which I did. As I have gone through different stages of my life, this has always been a consistent way to save for my retirement years and has given me some comfort as my pot has grown.
In my early 20's, as a beginner investor, I invested a significant portion of my hard-earned savings during the 'dotcom bubble' and unfortunately saw most of it fall quite rapidly. I carried the guilt of this loss for a few years. A wise colleague helped me see it differently-as a valuable and early lesson in the importance of diversification in investing and this was a very helpful reframe. We all make mistakes and that is how we learn.
As an advisor, I’m often the one giving money advice, however one of the best pieces of advice I have been given is to know how your relationships affect your legal rights when it comes to money. This is especially true for co-habiting couples, who need to think carefully about their legal rights when it comes to pensions, property, savings, insurances and making a will.
Having children to begin wasn’t easy, however I was advised that as everything is getting more expensive to start saving for them into a S&S ISA as soon as they were born, even a little amount per month as this builds up and will enable them to have a lump sum of money to use toward their education, house, new car or just a building block for their future. My children are only 4 and 2 but their savings have already started to grow and will hopefully help them when they are older towards their future goals.
I think the best advice I’ve ever been given is on having a f*** off fund. Building up a fund that allows you to walk away from a living or work situation that is no longer good for you or has even become dangerous to remain in. Having some money in the bank makes it much easier to take control in these situations.
Always maintain financial independence and not co-dependency in a relationship. Being able to communicate effectively and openly about money in a relationship, will help to bring you closer and avoid/reduce conflict when your circumstances change - for example, having children, changes on salary as you progress through your career and potential accidents and long-term sickness impacting on income.
Whenever you get a payrise, increase your pension contributions at the same time so you never get used to having all the extra payrise money in your pocket as some of it immediately goes towards saving (very tax efficiently) to securing an income in retirement.
Money is only a facilitator for achieving the life you want. Understand your personal drivers and goals first, and match your money habits to realising them.
On my first day of University, my lecturer said to us – as soon as you start working, start paying into a pension. My course was Financial Services and the lecture was in Personal Financial Planning – I doubt the Engineers, Scientists & Arts students all got the same piece of advice!
Far from being king, cash is for paupers. Money in savings accounts goes backward against inflation so having savings makes you poorer not richer! Who knew? Love yourself - learn to invest!
Although I probably groaned and rolled my eyes at the time, the best piece of money advice I got actually came from my Dad. He advised me to start paying something,even a minimal amount, into a personal pension and to develop an investing habit as soon as I started working. Over the years compound interest has worked its magic and those small investments have grown, more than my younger self would have imagined. It’s meant that when I took a few years out from full time work to raise my daughter, I was able to reduce, even stop payments for a while without feeling that it would adversely affect me in the future.
Oh, this is an easy one for me – from my Dad when I told him about how much all my friends were making on dot-com bubble speculation. He said, "explain what they are investing in." Errr... Anyway, being young and silly, I dived in with all £2,000 of my hard-earned savings. It didn’t end well. “Never invest in something you do not fully (or mostly) understand”. Thanks Dad. A cheap (ish) lesson learnt.
Don’t ignore your money. Don’t bury your head in the sand. Educate yourself, knowledge is power when it comes to money. Make time to do it, as it impacts every other area of your life.
