Personal Finance

3 Financial facts you wish they had taught you in school

Your school days were meant to be the very best days of your life, filled with fun, laughter, friendship… Oh, and a few lessons too! But how many of us can honestly remember learning about issues that would affect us in the real world?

I’m sure we all learned how to calculate Pi at some point or another, but can you remember learning how to calculate the cost of buying the ingredients to make a real pie instead? Not only would this have been more interesting but probably much more useful to the majority of us too.

Some forward thinking schools are now integrating life skills and citizenship into the classroom and tackling previously off-topic subjects such as teenage pregnancy, budgeting and business skills but this is too little too late for most of us.

So without further ado, I’d like you to turn to the next clean page in your exercise book and sit quietly while we go back to school and learn three financial facts that will stand you in good stead for the next few years. There WILL be a detention for anyone who doesn’t pay attention!

Getting the best deal for any purchases you make will be essential to your survival in today’s cash-strapped world. It’s worth remembering that however much you earn, there will never be enough money to do all the things you want to do, and therefore you have to work hard to get the most out of every penny you earn.

The recent digital boom has made it easier for bargain hunters to shop around for the biggest bargains, with a huge rise in comparison sites that allow you to check across several service providers at once, without having to make the effort to ring or email each one individually. It’s now easy to do things like compare car insurance prices or get the best energy deals.

However, these skills don’t have to be limited to the online world. You can negotiate for a better deal in bricks and mortar retail stores too – all you have to do is ask for a discount, what’s the worst that can happen? Did you know that over 40% of all purchases made are at discounted prices?

Interest Rates
You probably heard on the news recently that fixed interest rates were rising for the first time in over three years, with variable rates set to rise any day. However, you would be forgiven for being confused about what interest rates actually are and how they affect your finances.

In a nutshell, an interest rate is a yearly price charged by a lender to a borrower in order for a borrower to obtain a loan. This is usually charged at a percentage of the total amount loaned, and would be applied as a monthly charge on top of the loan itself.

Interest rates can either be fixed; which means the rate will not change throughout the entire term of the loan repayment, or variable which means the rate is subject to move up and down, usually in accordance with the interest rate set as standard.

On the face of it, budgeting is very simple. Money comes into the house and money goes out. The act of budgeting means monitoring both money in and out to make sure there is always enough to cover your outgoings, preferably with a bit left over for treats and little luxuries.

However, life doesn’t always work out this way and most people find it difficult to live within their means. Borrowing has reached an all time high with huge numbers of people allowing their spending to get out of control sinking deeper and deeper into debt.

Here are some useful ways to ensure this doesn’t happen to you:

● Don’t spend more money than you have – you’ll avoid costly bank and overdraft charges this way.
● Stick to grocery lists and don’t be tempted to go shopping when hungry.
● Take lunch to work rather than buying from the canteen everyday.
● Use cash instead of paying for everything on a card. It’ll be harder to hand it over if you can see it compared to handing over your plastic.
● Don’t rush into big purchases, always allow 24 hours to reflect on it and decide whether you really need it.
● Become an energy bore – switch off lights and electrical appliances whenever not in use and encourage your family to do the same.
● Try to save 10% of your salary before you even start spending and paying bills.

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