The Importance of Teaching our Kids about Money

FOCUS: THE IMPORTANCE OF TEACHING OUR KIDS ABOUT MONEY

This month we shift our focus to our children and the importance of teaching them about money

Regardless of our own financial circumstances, if we are to bring up kids who are able to live a full and happy life, it’s important we give them the tools to manage and understand money.  The saying that money doesn’t buy happiness carries some truth, but considering our entire planet revolves around its exchange, what money does or does not buy us most definitely impacts on our happiness.

The Benefits of Teaching our Kids about Money

There are many benefits to teaching our kids about money, for us and them!

In making a commitment to do this, it makes us look at the way we ourselves behave around money. If we constantly spend without saving or pay little attention to what is coming in and out of our bank account, we aren’t going to be in a position to set a good example. That isn’t to say we can’t, it just means our children learn by watching us.

If we can get to grips with some basic information to pass over to our kids it enables us to look at the way we manage money ourselves and work to improve that, thus providing a better example for our kids to follow.

As with anything, our kids learn their behaviour by what goes on around them. As parents we impact heavily on this. School, friends, family and other environments they are open to will affect the way they learn about money too.

If we are consistently giving them positive messages about money, this will become their normal. To give you an example of this, most of us can probably relate to being told certain things about money when growing up. As a child you take things literally and so these things take root and become your beliefs around money. For example, imagine you are told every day that there is not enough money, money doesn’t grow on trees, money is the root of all evil and money is hard to come by. As children, the messages we are given around money will most often shape our beliefs and behaviours around money as we grow into adults.

This highlights the real benefits of relaying very positive messages to our kids about money!

Where to Start

The most obvious place to start is with ourselves. By being conscious of what we say to our kids about money will help them create healthy beliefs around money. Money is after all just paper – it is the meaning we apply to it that really makes it what it is (or is not) in our lives!

Start with the basics:

  • Give your kids an amount of money each week and explain that it is a good idea to save at least 10% of this (working out the percentages will also help with maths too). If your children are too young to understand percentages, explain it in a way that they can understand or show them with the money itself i.e. suppose you give them £5 each a week, have them work out the 10% to save or give them the money in change and show them what to save, taking out the 50p.
  • Talk to them about money in a positive way. Explain that money is used as a value exchange – kids obviously aren’t going to understand the word value in the way that we do, so talk to them on their level in a way they can understand. Perhaps around toys – for example, the value of a football or sweets etc.
  • Teach them about spending. Give them positive messages about paying bills on time, the reasons we work and have money so that we can pay for things.
  • Help them to understand spending within limits and why that’s important. Talk to them about debt and how that impacts on their quality of life.

Most importantly make money fun. Spending money should be fun but not so that you leave yourself with nothing. Help them to see that money is meant to be used for good and to benefit our lives and that ultimately paying yourself first by saving is the best thing you can learn to do for yourself!

Resources

Fortunately we have the power of Google and you’ll find some great articles, tips and advice about teaching your kids about money. You’ll also find you become better at managing your own money through doing it too!

ENJOY!

 

Categories: BLOG.

How to Set Yourself Money Goals for 2017

Whether we love it or hate it, money is a necessity and the better we manage it the better we find life to be.

Setting money goals is no different to setting other goals say around losing weight, starting to exercise and eat healthier or getting a new job for example, but because we generally tend to think about money differently, we don’t always achieve our money goals. Often the thoughts we have around money affect how we behave with it – why otherwise do some people have lots of it and others don’t. Although you could say it is about how much you earn, what you do with it once you have it is what’s important – so what this means is that it wouldn’t matter how much you had if you always end up with none…it might take you longer but you would still end up in the same situation.

We have to change how we think about money before we can change how we manage it.

Setting one or two goals is better than setting lots. So although you might have lots of things you want when it comes to money, setting a couple of goals means you are more likely to achieve them than setting yourself lots and becoming overwhelmed.

Start Small!

Start small – if you haven’t been great with money in the past that doesn’t mean you can start now – and pat yourself on the back for wanting to start now and set yourself some money goals for 2017!

Like anything things start to snowball, so when you have achieved your first small money goal you will have lots of confidence to move on and set more goals. Taking actions in smaller steps are also easier to deal with – that’s why people always learn easier in smaller chunks too! We can deal with small steps but when we have much larger ones it becomes overwhelming and we can easily talk ourselves out of it.

Which Money Goals to Set

Everyone’s money goals will be different but a good goal to start with would be setting a budget. This will help you manage your money from the start and pave the way to being able to have spare money too. Really setting a budget is about looking at the income you have coming in and the expenses you have going out – just simple maths really of your Income minus your Expenditure leaving what you have left to spend or save. As well as working out what you have left, doing this exercise will also give you an opportunity to look at where your money is going. Are you in a lot of debt, do you pay money out on things that perhaps you don’t need. Setting a budget is all about this and so spending some quality time working on this is a great goal to set. The idea of a goal is really having the intention – which is truly just the commitment to wanting to make it happen and then taking the action steps to achieve it. What’s also important is setting a time limit on it, so you work towards it. Otherwise you might just keep putting it off. Writing it down also makes it seem more real and there is something more real about putting pen to paper so get yourself a little notebook or something to jot your goals and actions down in. Doesn’t need to be anything fancy, just something you write any notes or thoughts around your goals in. So our first goal might look something like this:

GOAL #1 – WORK OUT A BUDGET

Timescale – 1 month, by February 11th 2017

Actions

  1. Read through the Money Advice Service Budget Planner Guide (there is actually one here)
  2. Decide where I can make changes to the things I pay out for so that I have more money left each month
  3. Work out how much money I owe.

There may be other actions you have too but the goal is simply to achieve a budget – so you know how much you have coming in, what is going out and to where and how much you have left. You could then move on to your next goal which might be to make a plan for paying off your debt. If you have a lot of debt that might take some time – it doesn’t matter how long it takes, the fact that you are working towards it means you will achieve it. Don’t forget, you don’t have to do this alone. There are lots of organisations out there who can offer free advice and help you with paying off debt. Work out your debt in the same way that you worked out the budget by putting the overall goal, which would be to create a ‘Paying off  Debt’ and then list the actions you need to take to do that. You can also set timescales for each action. So using our example of working out a budget, you might set yourself an action step each week.

Something else that really works and this is used by people  who manage army operations so it definitely works, is to work backwards. So if your goal is to  pay off your debt you start with that goal as your end result and then work backwards. So think to yourself it is February 2018 (or when you would like that goal to be achieved by) and I have paid off my debt and then work backwards taking all the action steps you would need to take to get there – you then have a list of things to do that lead you back to now….

Remember the Hare and the Tortoise

You might have read the Aesops Fable story about the Hare and Tortoise – racing off doesn’t always mean you will finish first and in that story the tortoise won the race by plodding along. The point here is to keep moving – take small steps towards your goal but keep going forwards and you will achieve it. Once you have achieved one goal it makes it much easier to achieve another and another and before you realise it you will be one of those people that others look at and say, he/she is great at managing their money, I wish I could be like that. You have everything you need right now to start managing your money better – set the intention (the goal), write down the actions (the steps) and start taking them!

Good luck and we hope that 2017 brings lots of good things for you around money and managing it better!

Categories: BLOG.

Financial Mistakes People Make at Different Ages

Although we can make mistakes around money at any age there are specific financial mistakes people make at different ages, generally through their 20’s, 30’s and 40’s. We thought you might find it a useful read.

Money Mistakes in 20’S

Spending too Much on Unnecessary Extras

When we are young it can be easy to get carried out with the latest gadget or high end luxury products that we really can’t afford but must have. Whilst we are all for treating yourself, it’s important to sit down and decide whether you can really afford the high expense.

Not Having Emergency Savings

This carries on from the first point. If you are spending too much on high priced goods, there may not be enough left over for saving. Sometimes even if there is, people in their 20’s don’t often see the benefit of saving, much preferring to be in the moment with their money. Having an emergency pot of savings means that whatever comes your way, you have money put aside should you need it. Putting away just a small amount each week or month will help build up an emergency savings fund.

Moving Out Too Soon

If we had a pot of money for every time we have heard, ‘when I am 18…’ well we would be quite wealthy by now. When people hit late teens and early twenties they often decide it’s time to move out, even if they can’t really afford it. Living with parents isn’t cool and so people in their twenties often move out into accommodation with others or on their own that is way out of their affordability range. It can also be difficult to manage balancing bills and other household payments. Whilst living at home might not be the best solution, it certainly can be financially for a while. Even if you are paying money towards the household, you will have much more left over for yourself and to save than if you were to move out and be fully responsible for bills.

Money Mistakes in 30’s

Buying a Bigger House or Car than you can Afford

Keeping up with the Jones’ is something that is more common in the 30s than any other age. Having survived the 20s it can often seem like the right thing to do, upgrading our house or car. This seems more common when we have had children and the house seems to be overflowing with ‘stuff’. Even those who haven’t had children find that in their 30s there is a burning desire to just go bigger. Chances are if you have had your existing home for a while you will have built up some equity in it. Rather than being hasty and moving to somewhere bigger, why not think of other ways you can create more space. It is surprising just how much clutter we acquire over the years. Still want to move? Set yourself a 3 or 5 year plan and work on saving some more money towards it. That way when you do move you will have some money behind you. Similarly, with cars it is easy to get something more luxurious and beyond what you could truly afford if you bought it outright. Lease and finance car options mean that there is always a better option available, but be sure you can afford the maintenance and that your mileage is covered. Sometimes buying a car yourself that is perhaps less of a luxury will be better in the long term. When you own the car yourself you also have the value in that if you do wish to change it. Leasing or financing often means you are paying for something you will never own and may end up having a bill at the end of it. Be sure to read all the fine print before you commit to anything.

Being in Debt

Once you get into having your own place, getting married and having children it can be easy to borrow money. Although having access to affordable credit is part of good money management, it doesn’t mean you have to run up debt beyond what you can afford to pay back. It is always better to keep borrowing to a minimum and pay things off before taking something else on. If you do find yourself in debt (at any age!) don’t bury your head in the sand, it will only make the situation worse. Seek help and advice because there is always a way to work it out.

Assuming You’ll Have Money in the Future

This will depend on the type of person you are and how you think about money generally. We can’t always assume we will have money in the future and so it is always worth having something set up for a rainy day and longer term for retirement. There are lots of options that you can look into and often employers provide a pension plan you can join.

Money Mistakes in 40’s

Not Having Enough Cash Flow

A lack of cash flow means that if the washing machine breaks down or the fridge breaks you might seek a loan from a high cost lender, just to get cash quick. Sometimes it doesn’t even need to be an emergency that means borrowing extra either. If you are living beyond your means or not having enough cash to cover day to day expenses, it might be time to assess your finances and give them a good MOT! Having enough cash flow means being able to save a pot of money for when you need it too. There are lots of budgeting tools online and ways you can cut back on spending.

Dipping into Savings

Sometimes we save for short term things like holidays or cars but it is always a good idea to have a pot of money saved for long term. This isn’t about paying for emergencies, but just saving money so you have something put by for later in life or when you are unable to work as much as perhaps you do now. Dipping into these savings can mean just a bit here and there with the promise of putting it back, but most often times we don’t. Try to avoid dipping into your savings and instead having a pot of money that you just use for short term things. If your longer term savings are in a higher interest account you are also losing money by taking it out!

Mid Life Crisis

Lots of people have them! It’s not always about having a sporty car (although sometimes it is). Forties do funny things to people when it comes to money. Whether that is booking an extravagant cruise, going crazy with buying a bigger home, redoing the house or a whole host of other expensive treats. Question your spending when you are in your forties. Although you are some way off to being at retirement age, it is worth being wise with your money. If you are spending extravagantly make sure you can afford it first and rather than making hasty decisions, give yourself time to think about them.

Financial Mistakes People Make at Different Ages

Truly we could apply many of these money mistakes to any age. If any seem relevant to you, take some time to figure out what you have coming in, going out and what you can save. Work out a savings plan, so not just short term saving but an emergency fund and long term saving too. If you get a pot of money built up you might also want to get advice on investing.

Whatever your financial situation just know there are always options for you both in saving and borrowing and lots of good advice out there to help you.

 

Categories: BLOG.

What’s Your Savings Plan? Start saving now with our Christmas Savings Club

Benefits of Saving

There are many benefits to saving regularly, some of these are:

  • You will have money put aside in case of an emergency
  • Saving regularly helps you manage your money better
  • When you save you become more aware of what you are spending your money on
  • Saving is a good habit and once you start you will find it easier to save a little more
  • Sets a good example to your kids, teaching them how to save

Did someone say Christmas?

Despite the weather at times, it is the middle of summer, so saving for Christmas might seem a little crazy to think about at the moment. However, most people can all relate to feeling a little panicked towards the end of November. This is when they realise there is just a month left until Christmas and maybe one or two paydays in between. There is always so much to buy; presents, food and not to mention the parties and never ending get-togethers. Worrying about money can take the fun and enjoyment out of Christmas. Planning early is actually a really good idea and with less than 6 months until December, now is the time to start.

Spending Tracker

Studies show that tracking your money while you save is a good way of figuring out where your money actually goes. You might think you spend it all on food or the kids, but chances are you can’t account for all of it. Download one of the free spending tracker apps from your iPhone or Android app store and start logging your spending. Once you get clear on what you are spending your money on, you’ll find you want to make a few changes and may be able to save a little bit more.

Make the Commitment

For now, though, just decide on an amount to put by each week and start this week! Don’t be tempted to put it off. There will always be next week, but this just lets another week slip by. Before you know it, the summer will have gone, we will be into autumn and you’ve not saved anything. Do it this week and make a commitment to yourself to save a little every week. After all, you are going to be thanking yourself for it in December when you can afford to buy Christmas presents and food without worry.

Saving is Fun

Why not make it something fun for the family and get your kids involved in saving too. Children always like to buy their family or friends a little present for Christmas. As well as getting them excited about being able to do this, it is also teaching them about managing their money and saving. As they grow up they will remember what you taught them about money and it will carry on into their adult lives and help them too.

How to Start Saving

People find that by transferring money to their Nottingham Credit Union account, or having the money paid in there, makes it easier to save. When your savings are separate from your bank account it removes that temptation to dip into the money. Even better, we offer a Christmas Savings Club that just ring fences that money for Christmas only. This means if you do have money in your regular NCU account, the Christmas money can remain separate. With our Junior Savers account, setting things up for your kids to save too couldn’t be easier.

Contact a member of our team today and get everything set up and start saving for Christmas today.

Categories: BLOG.

How to Deal with Credit Card Debt

We live in a ‘want it now’ society. Credit cards are easy to come by and leading up to Christmas, when the pressure is on to buy gifts, give our children a memorable Christmas and have happy holidays, it is often difficult to resist the appeal of instant credit.

By December 2015, total credit card debt for the UK was £63.35 billion. Per household this is £2,346 and for a credit card bearing average interest, it would take a whopping 25 years and 5 months to repay (yes you read that right!) if you only made the minimum repayment each month. The minimum repayment in the first month would be £56 but reduces each month. If you paid £56 every month, the debt would be cleared in around 5 years and 5 months. These statistics are taken from the Money Charity Statistics

Based on the above information there are two clear ways to clear your credit card debt, without spending a lifetime doing it! Firstly, you could consolidate the debt, so you pay a fixed sum each month for a fixed term and perhaps get a lower rate of interest or secondly, you choose to pay a higher sum each month to clear the credit card.

Credit cards have many benefits. They can be used monthly to pay for fuel, groceries and give peace of mind when buying online purchases. Credit cards come with incentives to spend, such as cashback reward schemes, air miles and loyalty points. Having a credit card builds credit and shows a history of repayments, contributing to increasing your credit score. However, unless you have the means to manage the credit card each month, many people will pay and clear the bill for example, credit cards become a long-standing debt that is easily added to and very difficult to clear. Although ideal for necessities such as renting a car, replacing a household appliance or car breakdown, using a credit card as income, is living beyond your means and you will find yourself struggling to make the repayments necessary to clear the debt.

The first step is to realise that you can stop now and deal with your credit card debt. Denial is only going to lead to more debt, so be honest with yourself about your current situation and make a commitment to clearing the debt. If you have one or more cards that you are struggling to clear, cut the credit cards up. Although this seems quite drastic, you have to recognise that the only way to clear the debt is to firstly stop adding to it. The interest will increase the debt alone without further spending each time a little more credit becomes available to you.

Seek advice as to the best way to clear the debt. As outlined above it may be that you are able to consolidate into a more manageable loan that means you fix an affordable amount you can pay each month and for a set period of time until the debt is cleared. If you are unable to consolidate the debt but struggling to make the repayments, seek advice. Don’t bury your head in the sand and hope that the situation will resolve itself. It won’t. The Money Advice Centre or your local Citizens Advice Centre can help in this regard.

If we want different results we have to do something differently. That means changing our spending habits, living within our means and managing our money better.

 

Categories: BLOG.