What do you wish you'd known about money when you were young?

Mags_cat

I'd have found this useful :

Think about the cost of something you want in relation to your hourly/weekly/monthly income e.g. that jumper will cost me 4 hours work or that car will take me six months to earn.

Buffythedebtslayer

I think they should always having savings, not a huge amount and not at the expense of debts but just something to full back on and really to think hard about credit - its not all bad but you must be responsible for yourself

xxx

Soubrette

Don't just look at the monthly repayments - look at what you are repaying as a whole. So if you borrow £2000 for a holiday - don't think oh £60 a month is affordable let's do it - look at what you're borrowing over the whole term - so if you're borrowing an extra £800 over the term, is it worth it?

Also what will you do if you have borrowings and interest rates rise?

Sou

DarkConvict

Use the snowballing calculator - Give them examples show them if they pay it with there own money how much they save,

Buy now on credit over 3 years you have lost £500+ in interest, buy it in 12 months once you can afford it, you own it for the price you paid.

In life problems happen, at any moment you could loose your job, do you have savings to cover what you owe, or are you in trouble!

Good old rule, only buy what you can afford. Credit is someone else money if you have to use credit, you can't afford it! When you use someone else's money you have to play by their rules, if they want it back, you have to pay it, if they want to charge you for using it, you have to pay. If you don't understand why credit is bad, don't use it! (If they don't understand the bad they won't be able to understand the good benefits)

Sadly there is a chap at uni, over the moon he is paying £3 a month for his laptop due to minimum payments on his credit card, we all hung our heads in shame how a 21 year old can really think he is saving money.

This is the hardest one. Credit cards must be paid back in full every month (that's simple). (This is hard) Show how if you make min payments then month after month the min payment is rising as you spend more, eventually you can't afford min payments. By making minimum payments you feel you have surplus cash available when in reality you do not, you are in debt, by not making full payments each month you have an additional out going of interest that you would not have had if you paid for an item in full. This is the one that catches out so many people, story after story we hear on here is people with several credit cards but then afters years on min payments suddenly they realise all there outgoing is on interest and they can't actually afford to pay it off, by which point it is to late! Average is like 41 years to pay off a credit card if using minimum payments.

Example

Want to buy a £1000 laptop, but you can only save £100 a month.

---

No Credit. Wait 10 months. £1000 saved, laptop brought (and to be honest its probably cheaper and a better specification, but that's the technology industry for you)
Total cost - £1000

---

With Credit, 17.9% APR, pay back £100 each month

Total cost - £1074

---

With Credit, 17.9% APR, pay only minimum payments (£5 or 2% balance)
It will take you 348 (29 Years!) months to pay off these debts if you snowball correctly. During that time, you'll pay £2,243 in interest.
Top big to screenshot! So here is start and end


Total cost - £3,243

earthmother

A bit old fashioned, but still perfectly valid are two quotes -

Annual income twenty pounds, annual expenditure nineteen six, result happiness.
Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
(Dickens)

And

Neither a borrower nor a lender be
(Shakespeare)


On a more current theme - mags-cats idea is similar to one we've often used for ourselves and the kids - when it came to small/un-necessary spends, we think of what they could add up to. The sky TV went when we explained to the kids that 3 months of Sky equalled a trip on a steam railway or to the Space Centre. Before kids, we didn't do the lottery when it first started, because a pound a week over the year meant a cheap weekend away with the tent, or a new bike helmet - which was a certainty rather than a 1-in-whatever chance of winning.

lilac_lady

Explain to them that NOTHING is free when it comes to money, especially if plastic is used to pay for things.

ceridwen

1. How many ways firms have to make people spend money they neither need (or even particularly want) to spend - eg all those adverts/supermarkets placing their products carefully (goods at tills/cheaper goods on shelves nearer the floor).

2. You get what you pay for - that is certainly true to a large extent in my experience (there ARE always exceptions to every rule). The British do expect to pay peanuts for some very important things - like their food for instance - and a lot of people dont seem to realise that is not the way to a healthy diet.

3. If you are paying a cheap price for something (eg budget store clothes) - then the chances are that someone somewhere is bearing part of your costs for you:cool: (eg "slave" type labour by employees making these goods). Its not right to pay an overly cheap price for something at someone else's expense (or the Planet's expense).

4. Its not necessary to be amongst the first group of people to buy some new "widget" on the market. The chances are that a bit further down the line it will have come down a lot in price (as things stand at present).

5. The effect on the supply of/prices chargeable for things once we hit "Peak Oil" and this resource our society has been based on for 150 years or so starts becoming more and more expensive.

ceridwen

Buffythedebtslayer wrote: »

I think they should always having savings, not a huge amount and not at the expense of debts but just something to full back on and really to think hard about credit - its not all bad but you must be responsible for yourself

xxx

One thing a bit of savings does is to not just provide the money if/when an unexpected expense comes up - the other purpose of savings is to have a bit of "*** off" money - so you dont absolutely HAVE to take or keep some awful job.

That particular lesson is going to be even more important to them in the future. Jobs are becoming much more difficult to get and paying less - and the only comeback one has sometimes is to have that little bit of savings stashed away and know that its possible to turn down some particularly awful job and hold out for a better one.

ceridwen

YOU are responsible for your own costs - dont expect other people/the State/etc to cover your costs for you. Make arrangements to ensure that YOU can pay your own costs
- a. because others/the State cant be relied on
b. because its not right to try and put your costs onto other peoples/the States shoulders anyway.

yellowduck_2

I wish I had been taught the following:

How APRs work
How to budget
I did not have a clue about money when i was growing up, like sex it was the great unementinable mystery in our house, we really need to educate young people about the way debt and credit can truly muck up your life if they do not know the facts.