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    MSE Martin
    5 Things Teens Should Be Taught About Money
    • #1
    • 22nd Oct 04, 1:30 PM
    5 Things Teens Should Be Taught About Money 22nd Oct 04 at 1:30 PM
    What's new?

    I've revisited this thread as it's a gooden and turned it into a Great Hunt. Click reply to add your ideas.

    Back to my original post...

    I was woken this morning by Sky News. They were planning to do a piece of personal finance education in schools.

    Scratching my head in dreary sleep talk, they asked me what five rules would you tell a kid about money. Hastily I came up with the following five, admittedly none are things I've not said before and don't come up in the Money Diet, but it was an interesting exercise.

    After you've read my five, I'd be fascinated to read any rules you think kids can be taught. If there's some good ones, I may turn it into an article from the site 'wisdom from an older generation'....

    So let me start it off:

    A company's job is to try and make profit from us

    The sooner people understand society is adversarial, and companies care about profits the better. That way a skeptical eye can always check, why are they doing this?, how do they gain? a good way to prevent problems?

    Interest Compounds

    Compound interest is very powerful. When you're saving, as you earn interest on the interest your savings grow more quickly over time. When you're borrowing, as you're charged interest on interest your debts increase rapidly. Be aware of the impact of compounds.

    Always check three

    I'm not a big fan of the 'shop around' mantra. Generally I believe 'think through the logic' is a better start position. However, whatever you do or buy, checking three sources to ensure you're getting a good deal is a golden rule.

    Pay off debts with savings

    Understanding that debt and savings are just opposite sides of the same coin is a must. If you've 1,000 of savings earning 3% after tax, that's 30 a year gained. If you've 1,000 of debt at 18% that's a cost of 180. If you paid off the debt with the savings you'd be 150 better off.

    Of course, the more sophisticated understand that if the debt is cheaper than the saving you can profit, yet in most lives this is rarely the case, so pay off expensive debts with underperforming savings and you're doing well.

    Bank accounts lie

    Your bank account is just a snapshot of your current finances. It doesn't look at what money is due to come in and go out. It doesn't look at your spending over a year. All ii does is give you a picture of an instant in your account. You couldn't take one still frame of action from Eastenders and know the entire programme script, a bank account is just that; a 'freeze frame picture' - don't trust it. (see Budget the way)

    That's my starter, now over to you....

    See the full Financial Education Campaign section for lots more info.

    Last edited by MSE Researcher; 20-01-2011 at 6:39 PM.
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