When we set out on our journey of financial planning, we start with a base level of knowledge that we’ve been taught by our parents.
While they may have never sat you down and given you an actual lesson in how to manage your personal finances, you will have seen how they manage their finances and, perhaps subconsciously, picked up habits from them. As you become an adult you question these habits which might lead you to wonder, what financial habits do you wish your parents had taught you?
We thought it might help you to get a little bit of perspective from the team at Ethical Futures. So, Marian has gone around the office and posed that exact question to some of our staff and here’s what they had to say.
Shane – Financial Planner
My parents taught me how to be responsible and how to live within my means. My Dad became a keen saver when he worked for a large business with a decent salary. I learned from him that to achieve a good retirement outcome requires habitual saving and real commitment. He became aware from his peers that the smart thing to do was to throw as much as he could afford into the pension scheme, living off the rest. Such a sacrifice over many years helped him retire at a relatively young age. I think that he set a very positive example which I hope to pass on to my children.
Andy – Technical Researcher
School back in the late 80’s didn’t teach anything about personal finance requirements. When I left school, I had no appreciation of what tools were required while taking my first tentative steps in the real world. I was armed with my trusted TSB child saver account to meet all my financial needs! It wasn’t until payroll in my first full time job advised, ‘this account isn’t suitable to pay your salary to!’, that I appreciated how ill-equipped I was. In retrospect, this is something that could have been broached while still in school, it would have saved some embarrassment and stress had it been.
Alan – External Compliance Associate
Getting your first credit card can be both daunting and exciting. When I was a student, my Bank kindly offered me the opportunity to apply for a “Student Credit Card”. It had a very low credit limit (just £200), but the bank made it apparent that the only way to build up a credit score was to get credit and use it. What I wish I had been told by the Bank at the time was that I didn’t just need to get a credit card and use it, but also pay it off every month, rather than just paying off the minimum amount.
My grandfather kindly paid off the £200 balance of my credit card for me on my 21st birthday and gave me the following advice: “Never buy anything you can’t afford.” He was, I later discovered highly sceptical of any form of loan, he bought his house outright without a mortgage, he never took out a car loan, choosing instead to save up until he had enough money to buy one second hand. I really appreciated his advice.
Nowadays I use my credit card regularly, but I make sure that what I buy with it is something I can afford with the money in my bank, wherever possible. I know that I am lucky to have a job which means I can save some of my income which I can draw on when the boiler breaks or the roof needs fixing. I have never taken out a store card, wary as I am of my initial foray into the world of credit.
Saving is really important. If you can, you should always try and save something of what you are paid as soon as you receive it, rather than waiting to see what is left at the end of the week or month. I understand the psychology of this a lot better now than I did when I was younger. If you save something straight away, then you can’t be tempted to use it for something you want but don’t need! I have also taken to using multiple bank accounts to organise my bills, spending money and saving; it helps me keep control of myself because we all have moments where our willpower needs a little encouragement.
Marian – Marketing and Communications
My mum always dealt with our family finances when I was growing up and I never questioned why we used certain providers. Then as I grew up and was starting to set some things up for myself (mobile phone, bank account, credit card etc.) I asked her why we were with these companies. Why EE instead of o2? Why TSB and not RBS (I now know of more ethical options!)? And that’s when I learned that the providers my parents used were the ones my grandparents had used. My parents hadn’t shopped around for the best deals or the best offers, they had simply gone with what they knew. Then when it came time for me to start paying bills of my own, my mum was surprised when I chose to change banks from the one she used and didn’t understand why I changed mobile phone provider. While I understand that her bank had served her well, the one I switched to gave me a slightly better interest rate on my savings account. And after research, I found that while her mobile phone provider had been giving me an OK deal, there was another that had far more to offer me.
So, the financial lesson that I wished my parents had taught me is to learn to shop around for the best deals, don’t just go with the ones that your parents used.
We hope it’s been useful to see what the team wished they had learned from their parents. And maybe you’ve picked up some handy tips. So, we wonder, what financial habits do you wish your parents had taught you? Let us know on our social media so we can get a conversation going and we can share even more tips.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.