Last week, I appeared in a BBC Morning Live report on financial education, and what good money lessons look like. I gave a remote mini masterclass to students in Wales about the things I’d wish I’d learned at school about money – so I thought I’d share my full insights here. Here are my top ten money lessons for teenagers…
- Suss out what really matters to you – that will help you clarify your priorities so you can spend your money wisely.
My five passions in life are health, family, helping people when I can, getting better at my job and music. It’s helpful to write down the five things that you care about most in the world and then match that up with what you actually spend your time and money on. It can be quite sobering to realise that you’re not living in accordance with your values – so how can you change that? It might also help to keep a spending diary to see exactly where your money goes. It’s always worth really analysing whether you need to spend money on the things you most love. For instance, it’s good to know you can spend time with your friends without having to splash the cash. There’s plenty of free and fun things you can do together – friendship doesn’t have to come with a price tag.
- The one word that will make a huge difference to your finances is boundaries.
As Jane Austen once wrote, “once money is parted with, it can never return.” When you leave education and start working, your money is going to feel precious to you, and you’ll want to spend it on things that brought you genuine happiness and fulfilment. One way to ensure this is to establish clear boundaries within your finances, whether that’s setting spending limits or limiting the amount of passive time you spend online. Letting your phone serve you countless inducements to spend money is going to have a powerful subliminal impact on you, no matter how discliplined you like to think you are. So if your social media feeds are full of beautiful people doing beautiful things that cost money, it’s bound to influence you in ways that can be very unhelpful – not just in terms of your finances, but your self-esteem too.
I am very strict about what influences I let into my life because of the adage “out of sight, out of mind” – a good analogy would be that you’d never have cookies in the house when you’re trying to eat healthily. Take breaks from your devices and unfollow influencers/brands on social media who tempt you to overspend. Also, contactless spending and auto-fill forms for your cards online make it harder to stick to your spending limits. Set a daily spending limit, don’t save card details online and experiment with withdrawing cash and using only that for a day or two. You may find it really helps.
- Be smart about debt.
There’s an easy way to learn about debt, and there’s a hard way to learn about debt. Please learn the easy way! I’ve known so many twenty somethings who regret the day they took out a credit card and started viewing it as free money. There’s no such thing – you will have to pay debt back, and if you don’t do it in a smart way, the cost could be enormous. Only spend what you can afford to pay back in full as soon as possible. The same goes for buy now pay later – if you have any doubts about whether you’ll be able to make it work, leave it well alone.
- Figure out your budgeting style. Stick with it.
Some people prefer old-fashioned spreadsheets, others like using digital budgeting tools. You might like the 50/30/20 rule (50% on essentials, 30% on fun stuff, 20% on savings and pensions). Or you like to set specific limits on each area of your expenditure. Experiment, try different approaches and see what works. Once you find the right strategy, stick to it (unless it stops working for you, in which case, try something else!) Consistency is key – that way, you’ll get used to budgeting and it will become a habit.
- Save what you can, when you can
Look – there will always be reasons NOT to save money. But if you can look for way to save money whenever you can, future you will thank you. Try not to think of it as a sacrifice, but you creating more options for you further down the line. Look at round-up savings, the Lifetime Isa, lottery savings, whatever makes the whole thing more appealing and do-able for you.
- Stay in your workplace pension and save extra if you can
Your pension is there to ensure you can retire one day without having to worry about money. The earlier you start, the better because you’ll have more time in the stockmarket, you’ll be able to build up your fund more and you’ll get the maximum benefit from compound interest, an amazing phenomenon where interest earns its own interest. You also get free money from your employer and tax relief from the government. So the moment you’re put in a workplace pension, try to stick with it, and put extra in if you can (e.g. when you get a payrise).
- Don’t be afraid to talk about money with your friends and family
Money can become a no-go subject in our lives, but that simply creates misunderstandings, inaction and outright conflict. The people around you need to understand your financial goals and limitations, and vice versa. The more you talk about money, the easier it will become and the quicker you’ll be able to deal with problems and dilemmas as they arise.
- Be scam-aware.
Anyone can fall victim to fraud because the crims have become more cunning, clever and determined than we give them credit for. So keep up to date with the latest scams doing the rounds and always be skeptical when people phone you up out of the blue or offer you a fabulous-sounding money making scheme online. If it sounds too good to be true, it is. Listen to your gut and be prepared to walk away.
- You cannot get rich quick.
There is no easy, fast way to make money that’s risk-free and guaranteed. Just look at the crypto rush of recent years – many investors hoped that the good times would continue, but that’s just our frail pyschology kidding ourselves that we’ve found a cheat code for finance. It doesn’t exist! You can get rich slowly through saving and investing in the “real” economy, but you’ve got to be patient and prepared to screen out the short-term noise.
- Learn to love cooking.
This is self-explanatory – enough with Deliveroo, get in the goddamn kitchen! Seriously, I totally understand why it can seem hard to rustle up tasty but nutritious meals every single day but I can honestly say this is by far the most important thing you can do to save money and create space in your life to achieve other financial goals. I like to lean heavily on hero ingredients that work in multiple meals and I’ve been using my freezer waaaay more in the past year. Try to have fun with it and not be a perfectionist, and you’ll soon find it’s not as hard as it looks.
- Keep money in your head, not your heart.
Finally, the author Jonathan Swift once said: “Keep money in your head, not your heart.” Money is not the be-all and end-all and having money doesn’t make you a better person. It’s just a tool that we can use to achieve security and peace of mind. So learn to use it wisely, and you’ll be so grateful.