Читать книгу Money: A User’s Guide - Laura Whateley - Страница 6
ОглавлениеThis is a little guide that I could have really done with ten years ago, when I was twenty-three, and fresh off a First Great Western into London, one of the world’s most expensive cities, ready to start my first full-time job as the global economy crashed. Here I address the things I wish I had known about money earlier (the younger you start saving the more time your money has to grow) but was too embarrassed to ask. I assumed everybody else already had it nailed. Turns out that most did not, and still don’t, whatever their seeming competency at being an adult.
My aim is to make sense to those of you who write yourselves off as bad with money, the way I once did and often still do, as you stare down the barrel of your overdraft. It does not have to always be this way. Anyway, what does being bad with money even mean? Failing to check your bank balance regularly and not putting enough in a pension? Or putting so much in your pension that you haven’t had a holiday since 2005? Who is to judge?
Here is a secret: everyone is ‘bad’ with their money sometimes, some people are just better at styling it out and not letting on, some are rich enough that they can keep it well hidden. We are psychologically programmed to make poor financial decisions. There’s a whole Nobel-prize-winning area of academia, known as behavioural economics, to describe how. And because no one likes talking about money, and no two people agree on what it is for, whether it is better to spend it or to save it (clue, there is no right answer), the myth that others know what they are doing is rarely exposed.
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So read on if you have ever wanted to know, what actually is an ISA? What tax do I pay and why? How much should I be saving towards retirement? Should I be investing any money, and if so, how? Should I pay off my student loan? How do mortgages work? What are the best budgeting apps? How do I split money with my other half fairly, and can I ever afford to buy a home, bring up a child, or be the kind of person at ease in small-plate restaurants? What stupid mistakes am I making with my money, and how can I stop it making me feel so crap about myself?
Get through this in an afternoon, and you should know a lot more than you did this morning. I can guarantee that if you follow at least a couple of tips in this book you will have already reimbursed the cover price.
But first, a bit about me, us feckless ‘millennials’, and where we are at.
Please note that I use the term ‘millennial’ reluctantly. It is a word that has come to make me itchy, a crude catch-all for the 14 million or so very different people born between the early 1980s and the year 2000, some of whom are now parents of teenagers, your boss, your lawyer, your surgeon, or your favourite novelist.
In September 2008 I went for an interview for a role as editorial assistant on the Money section at The Times, the optimistic move of a young graduate not yet grown into the full self-doubt phase. The night before, I’d been up late Wikipeding ‘what is a mortgage?’
The timing of this interview, the beginning of my career so far, was significant, though I didn’t see how at the time. Two weeks earlier the world’s fourth-largest investment bank, Lehman Brothers, had collapsed. The headline on the front page of The Times on the day of my interview was alarming: ‘the eye of the storm’, with a photograph of black clouds gathering over the White House. The introduction read:
The financial system lurched closer to a catastrophic breakdown last night after the US Congress dramatically rejected a bailout plan designed to restore confidence to paralysed banks. Wall Street suffered one of its worst days in history.
In 24 hours five banks across the West, including Britain’s Bradford & Bingley, had to be rescued to avoid insolvency … the Dow Jones industrial average of shares dived almost 800 points, losing 7 per cent of its value. It was the worst one-day points fall and the worst percentage fall since Black Monday in 1987.
I had little understanding of what all this meant (‘Dow Jones industrial average’, eh?). Nor many of the increasingly panicked headlines that followed over the next few weeks: ‘World takes fright’ … ‘The scramble to sell: £2.7 trillion wiped off the global value of shares’ … ‘Banks nationalized’ … ‘Slump pushes jobless towards 2 million’.
I would learn, as I explained hopefully to my new editors. They, unbelievably, took me on. A money journalist is one of those things, like Tupperware and condoms, that you need more of in a recession.
Exactly a decade later, still writing for The Times about consumer affairs, now helping readers with their financial woes and blunders as the consumer champion known as ‘Troubleshooter’, I see how much those few weeks changed the world, not least for those of us who received our first pay cheques in the period since the financial crisis took hold.
Lots has improved, as I’ll explain through this book. Banks are desperate to win back our trust, and technology has created countless new opportunities to make it easier to manage money well. But there has been a lasting difficult legacy, especially for those, such as my sister, who are a few years younger than me. Most under-thirties, however diligent, will never be able to buy a decent-sized home in a great part of an exciting British city on their salary alone, especially not while their incomes are reduced by student loans for decades and they are simultaneously trying to save enough into a pension to afford their heating bills when they reach ninety.
Jobs are insecure, wages static. Many, whatever their age, now work longer hours in smaller teams of staff, doing more for relatively less money than their seniors ever did at the same age. The spectre lingers of another recession and a further round of redundancies.
This is coupled with navigating the money-related dilemmas that come as part and parcel of growing up, whatever generation you were born into: how to become financially independent from your parents, how to work out money with your friends without being consumed by status anxiety, how to provide both for yourself and for your family, how to earn more and spend less without missing out on the things that make you happy and life worth living.
I also believe our ability to feel good about money is diminished by the fact that the financial services world loves to obfuscate. A lot of companies make their profit by exploiting our ignorance of how their products really work, maybe cynically, or maybe just because they too overestimate how financially competent their clients really are.
There is a move towards greater transparency, but there is a long way to go. Meanwhile the paralysing choice of financial products out there grows into a dizzying, offputting blur of numbers, percentages and jargon. There are, as I detail in my chapter on household bills, now about half a million subtly different mobile and broadband deals available to ‘choose’ from. Going to the pub is better by far than boring yourself to tears trawling moneysupermarket.com, and everyone who advertises on the site knows it.
The following chapters are a compilation of advice and tips I have picked up about personal finance since the credit crunch and since my student days, inspired by making my own myriad money mistakes while observing and writing about the traps that Times readers have fallen into.
IMPORTANT DISCLAIMER: I am very much not a financial adviser. The only post-school exams I passed involved words (apart from a first-year university statistics and maths resit that continues to give me stress dreams). I’m just a journalist. None of this book constitutes official, legally watertight, financial advice. What it offers are observations and suggestions formed by speaking to real qualified experts, researchers and proper financial advisers about how to avoid common errors.
Even so, I hope this information will help equip you with enough money basics to feel more confident about your own situation and whether or not you can improve it. I hope it will offer a glimpse into how to make better, more informed, more ethical choices, and how to avoid being mugged off by your bank and your mobile-phone network, which will save you far more money than cutting back on a few brunches ever can.
Good luck! If I can do it, so can you. Seriously.
Who this book is for, and how to read it
To state the obvious, the best advice on how to manage your money varies depending on how much of it you have and what stage of life you are at. This presents a dilemma when writing a shortish book. I had to make some decisions about who to address, what to include and what to leave out. I have chosen to focus on advice that I think is most practical for people under the age of forty, who have probably borrowed money to study, and who are earning enough to pay tax and rent a home privately, possibly working out whether or not they can afford to buy their first place.
Most of the advice applies to the whole of the UK, but in some cases laws and processes – such as how to buy a house – differ slightly in Scotland, Northern Ireland and Wales. If you don’t live in England and are in doubt, please check.
There are also things I mention that change year by year – tax allowances, for example, a company’s financial products, or government policy – which may mean that some of what I say here falls out of date. I have written with figures, laws and product recommendations true of autumn 2018.
I write appreciating with respect that there are millions of people in the UK who have to manage on minimum wages, and rely on benefits and food banks. There are millions of Brits who could not fathom having enough cash to invest in the stock market, or contemplate buying their own home in an area of their choosing. I have also carried out research for this book by chatting to some baby boomers and some pensioners who, just like those under forty, said they could really do with tips on how to save more and spend less. So while this book may appeal most to a younger, wealthier-than-average demographic, I hope people of all ages and financial means may find something that helps them in here, whether it is to understand how to get a better deal on your energy, get help to cope with unmanageable debt, decide whether or not you should make a will, or pick the most suitable bank account.
The book has three parts. You can read it in order, or pick out any chapter – they each stand alone – to get some advice on a particular topic that is relevant or concerning to you, such as how to understand your pension.
In PART ONE I go through the areas of personal finance that I think are most relevant to the under-forties, starting with housing and borrowing, through to how to budget, where to put aside savings for your short- and long-term future, and how to understand and reduce both your household bills and the amount of tax you are paying.
In PART TWO I look at how money makes us feel about ourselves and our relationships, offer some advice gathered from counsellors about how to deal with our emotions around money, as well as some practical tips on how to split it while cohabiting. I detail how to manage money if you feel that it is making you unhappy, or exacerbating an existing mental-health condition.
If you read most of the chapters in sequence you should have enough of a grasp of your finances by the end of Part Two to decide whether you want to do something better with them, not just to make yourself richer, but with consideration for wider society.
PART THREE looks at the growing, and important, shift towards arranging our personal finances ethically, from checking the source of the energy you use, to where to invest your pension, in a way that is mindful of its impact on the environment and other people. Being good with your money is not just about making more of it.
