Finances: The Advice You’d Give Your Younger Self
When you were little, did you have grand ideas regarding how your life would pan out? Perhaps you thought you’d be married by 20, have children by 25 and own a house the Royal family would be proud to live in.
If the dreams and wishes of your younger self played out exactly how you’d imagined, congratulations! Like marrying that Hollywood movie star or landing the role you envisioned for yourself (astronaut, anyone?), we all know that childhood dreams rarely (sorry!) become a reality, though.
Perhaps more feasibly, you thought you’d be in a better financial position than you’re now in, which brings us to that all-important question – and the very subject of this article – what money advice would you give to your younger self? We’ve asked people to let us in on the wise words they’d tell themselves if they could travel back in time. Read on…
‘I’d tell myself to save for a pension’
Sheila McDonald, 60, from Leominster*, says “I wish I had sorted out a pension sooner – and had more savings.” She tells us she didn’t set up a pension pot until she started her current job – around five years ago – and ‘my pension won’t be a lot’ [when I come to claim it].
What to do if you’re in Sheila’s position: Firstly, you should know that it’s never too late to get started saving for a pension.
‘Building up a decent pot can be particularly challenging for those who, for whatever reason, are late to the pension party…, states The Guardian, adding ‘…because they have less time to pay in, and their fund has less time to increase in value.’
If you haven’t started saving for a pension and you’re in your over 50s, you’re amongst a quarter of people who don’t yet have a pension within this age bracket.
Do you have at least 10 years’ worth of national insurance contributions over your adult life? If so, you will be entitled to some level of pension from the state.
Those in their 50s can top up their pension funds by saving anything up to 25% of their earnings (the suggested amount of ‘half your age, expressed as a percentage’) – it’s better to start now, if you can, than not at all.
Sheila also hoped she’d have saved more when she was younger – and that can be remedied too. By opening an account reserved for savings only, Sheila can start topping up her pension further still.
‘I would stress how important it is to save for the future’
“I’m not much of a saver – I never have been’, says 37-year-old Laura from Crewe*. “I’m not sure why, though, as my parents have always been savers – and I remember my sister stashing away a fair bit of money in her first bank account while she was still in primary school!”
Laura tells us that, if she could, she’d give her younger self a serious talking to. “I’d tell her to stop wasting her money on ‘stuff’ and instead start putting some away for a rainy day.”
“I tend to live month to month now – and I’m lucky if I have more than £1,000 in my savings at any one time.” Laura goes on, telling us that she’s also trying to save for her first property.
What to do if you’re in Laura’s position: Again, it’s never too late to change your financial habits and start saving – and there is plenty of budgeting advice and money-saving apps out there to give you a helping hand.
Why not plan a ‘No Spend Month’, where you buy only the essentials (no treats!) and see how much money you’ve managed to put aside after just 30 days? It could give you the encouragement to save more going forwards, too.
If you’re keen to invest in your future – now’s the time to start; If you’re wanting to save for your first home, a Lifetime ISA could be just the account for you, with no fees, an interest rate of 3%** [see the full Ts and Cs here] and a 25% government bonus added to what you save.
‘I wish I’d paid more attention to APR rates on catalogues etc.’
Forty-two-year-old Siobhan from Shrewsbury said she knew very little about interest rates and the like, when purchasing items from catalogues some years ago.
Siobhan says she is in a much better financial position now, but she could have avoided the sky-high interest rates if she’d had educated herself a little more. “I’d tell my younger self to read the small print before making a purchase – especially a big one – and always make sure I have the available funds to pay the interest as the months roll on.”
“I say this all the time, too…” she continues, “…but I wish they taught you about savings, interest rates, mortgages and pensions at school, because unless you have someone who’s clued up about it in your family (my mum!) I wouldn’t have a clue.”
What to do if you’re in Siobhan’s position: If, like Siobhan, you’re on top of interest payments after spreading the cost of a purchase online, great! If not, consider setting up a monthly budget for yourself – online or in a notebook – and stick to it.
Add your income and your outgoings and work out what’s left each month; this will help you decide how much money you can comfortably pay towards interest fees and bills.
Cancel costly monthly subscriptions you no longer use (gym membership, anyone?!), take your lunches into work and avoid the lure of a Friday night takeaway for as long as you can. Make a few small changes and you will soon feel much better about the state of your finances.
Want to know more about our financial products? Get in touch with the Unity Mutual team today. The will be happy to chat to you about our products, their T&C’s and answer any questions you might have.
Until next time…
*Names, ages and locations have been changed
