Things I would tell my 18 year old self about money

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Earlier this week, GirlGuiding UK announced that the organisation would be introducing a new Guides’ badge, aimed at improving the financial literacy of teenagers. You can read about the badge (and other new ones) here.

Since I am not aware of any aspect of the Personal Social and Health Education (PSHE) curriculum* in school that covers personal finance, I applaud the Guides for taking the initiative.

What would I tell my 18 year old self about money?

The Guides’ news got me thinking about what I’d tell my teenage self about money. I am actually 48 years old now. So, I’m 18+30, not ‘Club 18-30’. Ha!

30 years on from my coming of age, here are a few things I would tell my 18 year old self about money. I only wish I had taught myself these lessons earlier.

Always live on less than you own (and save the rest)

The 80:20 rule probably applies here. If you paid yourself 20% of your income as soon as your salary hit your bank account (and did this consistently from age 18), compound interest would do the rest.

When I spent a year in Switzerland, a fellow au-pair (Michelle) always sent cash back home for her pension. Her fantastic example was definitely one to follow. Michelle, I know you were destined to spend the rest of your life in Canada. If you’re reading this, I’d love to hear from you!

Get a rainy day fund

Grandma wasn’t wrong on this one. We all need an emergency fund and I’ve previously written about this to explain why. If you have debt and you haven’t got a ‘starter emergency fund’ then £1k is what you need while you’re paying down your debt.

If you’re debt free, then 3-6 months of expenses, stashed away in a rainy day fund, should cover most unexpected emergencies. Dear 18 year old self, if you don’t have an emergency fund, then Murphy’s Law will apply: what can go wrong will go wrong.

Yesterday, my mum told me that the source of a mysterious water leak in the parental home has finally been found. You can imagine how mum and dad felt when the kitchen floor had to come up. They’d have felt even worse if they didn’t have an Emergency Fund.

Know the power of compound interest

Interest rates move up and down over time. In my teens, interest rates were incredibly high (trebling at one point to a rate that almost crippled my parents when it came to their mortgage). Having had historically low rates in the UK for many years, borrowers have benefited over savers. Nonetheless, money invested wisely will grow and you’ll benefit from compound interest if you stick with it.

When you get the urge to splurge, distract yourself

Wait to buy whatever it is you think you need. Lie down until the feeling goes away (which it probably will). Control your impulses.

If you shop when you’re Hungry, Angry, Lonely or Tired, then HALT! Run a bath, take a nap, call someone on the phone. Go for a walk.

Know your triggers and if you need an accountability partner, find a friend who’ll help you stick to your goals.

In case of emergency, break glass

Make it harder to buy whatever it is you want by making your money a little less accessible. I don’t mean putting your money behind glass (although I have read that some people do this with their starter emergency fund!). I just mean putting it a little more ‘out of reach’.

If cash burns a hole in your pocket, don’t carry cash. Also beware of “wave and pay” – it’s all too easy to flourish that card and up to £30 is gone in an instant.

Be intentional with your purchases

These days, if I do need to buy something, I usually agonise over it (especially when it’s something new and not second-hand). I have to say, I bore my family as I pore over the various options before deciding on whatever it is I need.

My husband has a trick for when you do need to choose something: 1) Find something suitable. 2) Find something equally suitable. 3) Buy the second item you found. Job done!

Oh, and never pay full price. Especially for things like clothes.

Be prepared to walk away

I’m going to make a sweeping generalisation here, but I’d suggest that we Brits don’t care for negotiation when it comes to making significant purchases. We find the idea of haggling terribly awkward, even embarrassing. So, we avoid it.

That said, there have been a few times in my life when I have haggled successfully. One such time was the purchase of a new bed. I had a fixed amount to spend and I could not (and would not) go over this.

We found exactly what we wanted; an oak bed frame and memory foam mattress. The price of the two items together exceeded my budget by just under £50. So, I offered the salesman what I had. He wasn’t prepared accept my offer, so with my (then) little girl at my knee, we thanked him and headed for the exit. Just as I was pulling the door open to leave, the salesman was at my side. And we had a deal.

Second-hand is infinitely preferable

Some things must be bought new. Mattresses (see above); car seats (unless you know where they’ve come from); bicycle helmets; and riding hats (to give you a few examples) should really be bought new. However, so much of what we need can be bought second-hand. I’ve written about this extensively, so I won’t labour the point, but I really mean it.

Let go of your sense of entitlement

Just because X has Y doesn’t mean that Y is right for you. You may not be able to afford Y and that’s 100% OK.

In her book, The Overspent American: Why We Want What We Don’t Need, Juliet Schor exhorts us to “Beware prosperous referents.”

It may be that your girlfriends are remodelling their kitchens, having extensions built or are driving round in fabulous cars. Good for them. Chances are, they’ve put the home improvements on the mortgage and are paying over the odds for their vehicles through expensive car loans. Suddenly, being like them doesn’t seem such a good idea after all.

Get on a written budget

If you want to manage anything effectively, you can’t just wing it. Imagine you’re managing a project involving myriad stakeholders and various work streams. Chances are you’ll use a Gantt chart or project management tool to help you. So, why wouldn’t you do the same for your money?

My preferred ‘modus operandii’ is my dual account budget spreadsheet. I have tried apps (see My First Month with EveryDollar), but time and time again, I revert to my trusty spreadsheet. I like to see everything in one place and my Excel sheet does this just fine. Let me know if you want a copy of it!

Credit is like sex

Replying to my question on Twitter, “What would you tell your 18 year old self about money?” Tarra Jackson replied: Credit is Like Sex. Just because you can, doesn’t mean you should. And if you do, use protection (a budget).

Great answer, Tarra!

Better still, perform plastic surgery on your credit card. Cheaper than botox, you’ll look a whole lot healthier (financially) if you do this. This way, you can also tell your cash, “You can stay money.”

Don’t move up in house before you’ve decluttered the one you already own

One of the reasons excuses we all give when talking about moving house is that ‘we’ve outgrown our current house.’

Is it that our actual family has grown (so, we really do need more bedrooms)? Or is it that we’ve accumulated so much stuff that we need to take stock, purge and reset for the life we now live?

Only recently did we finally donate a collection of children’s books that might not otherwise have seen the light of day for some considerable time. Apply this logic to a whole house and you might save yourself a significant amount of money by not moving.

A minimalist mindset can help you win with money

Recently, I’ve been working on a short eBook on this theme: I do believe that adopting a minimalist mindset can help you with personal finance. When you stop going after things you don’t need (and let go of anything that no longer adds value), you’ll change your spending habits. And that’s something I’d love to have told my 18 year old self.

One final thing I’d definitely tell my 18 year old self is this: If you didn’t get your Girl Guide Savers badge, join as a helper and help someone else achieve hers.

*Teachers, if I’m wrong, then please do tell me. I really don’t think our 16 year old has had any such education at school, but I’m open to learning that I am mistaken.


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