Financial literacy – it’s a term thrown around quite a lot at the moment. We don’t think we need it because we think that as long as we can pay all our bills and our lives are happy, that’s enough, right? But what about our children? What about those financial goals we had in our 20s when we thought the world was our oyster?
For the first few years of my marriage, things weren’t easy financially. Shortly after we got married in 1998, my husband was made redundant. It wasn’t easy for him to find a job right away and he ended being out of work for a good few months. I was working at the time, so we weren’t in dire straits, but we were just about able to pay our rent and bills so there was certainly no money left over for luxuries or creating margin. We actually got into some debt without really thinking about the consequences that could have long term. My husband thankfully found another job eventually, but it took us a good long while to repay that debt.
However, none of our friends knew our situation had been dire. Appearance-wise, it still looked like we had it all together – we didn’t go out as much, but as we were a newly married couple it wasn’t really that obvious and we still appeared to have enough money and possessions. But honestly, underneath it all, things weren’t great and our relationship definitely took a hit.
Living with uncertainty is stressful and I wish I knew then what I know now when it comes to managing my finances better. These are my tips, to save you making the same mistakes I did when I was younger:
1. Ensure you have an emergency fund
You never know when your company is going to downsize or when ill health bites. Having 2 to 3 times your net monthly salary in the bank to cover your mortgage and expenses can help prevent added stress should the unexpected happen. However, I would even go so far a to say, don’t stop adding to the fund when you’ve managed to save the 3 months’ worth amount. My family and I are trying to work towards having a 6 months’ emergency fund, so that those unexpected car breakdowns, secondary school trips (£600 – yes… I kid you not) and emergency travel for family can be covered with ease.
2. Budget, budget, budget
Living your best life seems to be the trending mantra at the moment. However, I like to ensure that I am living my best life while still keeping my eyes on my future, so budgeting is key! I use a small notebook where I record everything I spend. You can also use spreadsheets and different apps, but as a full time chauffeur to my kids, running a home and working part-time, a notebook is what works for me. Sometimes, if I'm honest, I go over budget, but I’ll then try to claw this back the next month so it balances out in the end.
3. Pay of your credit card in full every month
Part of the reason we got into debt was the relative ease to get a credit card when you have a good credit rating. We still have credit cards now and use them to pay for things like petrol, the monthly food shop and eating out. We then pay it all off at the end of each month, so our credit rating remains good and we aren’t getting into unnecessary debt. I wish I had been this clever in my 20s!
If you, like me, wish you had been taught how money works and how you can make it work for you when you were younger, or you are still young and want to get a good grasp of financial literacy before you get to my age, sign up for our Financial Wellbeing Essential videos. At only £19, it is an absolute bargain.
Disclaimer: The above information does not replace financial advice. Please ensure you seek independent financial advice before making any decisions regarding your finances. We also recommend that you carry out your own research to ensure that this is right for your own unique circumstances. Please note that we sometimes link to other websites but we cannot be held responsible for their content.