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Friday, January 21, 2011

Learning early is the best way to financial health

You don't have to be rich to be good with money. Being good with money isn't always about getting rich, which is why I get shivers up my scrawny spine when I see adverts for 'Rich Dad' or 'Prosperous Parents'. The idea that the unwashed masses can achieve stellar returns by following the tips given by some 'guru' is noxious. The only reason these gurus are rich is because they make lots of money off the numpties who buy their books.

That said, the value of early learning should not be dismissed. After all, if my mother had not taught me to read at 1, I would not have been such a quiet child at 2. If my father had not taught me how to fish, I would never have been able to sew crayfish into my friend's curtains at uni.

One of the above statements is true.

However, I digress. I don't often brag about my parents and, considering that they are both mentally unstable and have poor fashion sense (sorry Old Tarf, but it's true) it's understandable.

However, with all the press releases and surveys I get at work about how terrible it is for first-time buyers, having to borrow from mum and dad, I thought it worth giving a bit of praise to my maternal unit.

My mum - nothing short of a financial genius.

I have seen how she came back to the UK in the early 1980s - hardly the time of equal financial and employment rights for women - with less than £700 in her pocket, unable to return to teaching, and a small daughter to bring up on her own.

I watched as she raised herself up, pound by pound, by clever saving, saying 'No' when the man from the Pru tried to flog her an endowment mortgage, and making expenditure less than her income - Micawber would have been proud.

Was it tough? Did we go without a few luxuries? Of course! Yet this woman managed to put me through private school and buy a house of her own and pay off her mortgage. And, now a pensioner living on less than £8000 pension a year (yes, a year), she is NEVER in debt AND still manages to save, when she's not gadding off around the Bodliean looking at early Church documents.

Moreover, she's taken on Barclays over unfair lending terms and won. She's scoured T&Cs of various pamphlets that pour through the door from providers and written letters to them and the OFT and who knows who else over what she deems to be sharp financial practice.

It's because of her that I got interested in saving when I was 16. I never, ever thought twice about putting aside a few pounds each week into my then Abbey National account. I didn't question whether or not to join the pension scheme at my first job - a defined benefit scheme - even though I was a highly qualified post-graduate, earning just £16k in what I thought would be a temporary job before I got my dream position preserving Anglo-Saxon manuscripts at the British Museum Library.

I didn't go against her advice when she suggested I put my bonus and, later, redundancy pay-outs into an Isa and start saving for a deposit. Every time, I have benefited from her good advice and sound wisdom.

I have never gone to her for money - she could not afford to support me through university education, but I took out small loans, worked during the holidays in a pensions office, and got a scholarship from the British Council for my MA, which helped me pay off my loans by the age of 22.

Perhaps rather than young people going off to the bank of mum and dad to help them onto the housing ladder, or to save up for a car, parents should take on the responsibility of educating children about money from a much younger age.

This is why I welcome the efforts of the Opposition MPs who are pushing for more debates on the Child ISA and a reprieve for the Child Trust Fund. Such schemes helped to educate both parent and child and that education is priceless. No matter how much - or how little - you have, learning early about saving is the very best financial start that any child can have.


Electro-Kevin said...

There's a lot to be said for knowing how to borrow.

It would seem wise to buy the most expensive house you can (in a good area at a good price, of course)and pay the interest only to make life bearable. Forget the capital sum until near the end of the mortgage.

"But you're left with the capital sum to pay at the end of it !"

Yup. If you'd bought the average house 25 years ago you'd now have a £250k asset to your name and a £25k debt to pay. You'd have been paying 'rent' (interest to the bank) a tiny fraction of market rent and would have had the time to save for the debt.

Far less risky than say ... a pension.

It's just a matter of convincing the lender that you have plans for raising the money at the end of it. My mortgage broker was able to work through this little problem for me.

the beast of jive talking said...

Ma Mermaid is just like Ma Beast and they both share the same name
Ma Beast also put me through private school via hard work
Pa Beast was a shiftless wanker who was still dressing like a BeeGee until he died last year(white leather waistcoats, fake watches and a fake tan)
Come on show us all a few photos that demonstrate just how much of an old hippy tarf is

Electro-Kevin said...

To be quite frank the worst thing I've ever done was to get involved in private pension schemes. They're an utter rip-off and I've been stung badly. (AXA through NatWest if you want to know)

About the only British people who can afford the yachts at the Boat Show we recently visited are most probably bankers and pension actuaries. I'm not surprised.

I don't know how your Ma can save money on 8k per year, but good luck to her.

The only things I can see being any good for the average joe are properties, BTLs and precious metals. Wine, art and motor cars if they have the money and the eye for them... hardly the thing for youngsters though.

Steer clear of sheisters who run pension schemes.

And always wear sunscreen.

Electro-Kevin said...

Believe it or not I wrote that comment utterly hammered from getting back from the pub last night.

Please don't show us photos of OT in his hippy days. I couldn't bear it !