I have been writing about money for a long time now, but I’ve still made plenty of mistakes of my own when it comes to my finances.
My eldest son is nearly five and taking a keen interest in money (and how the cards in Daddy’s wallet can be used to get toys), so I’ve been thinking about some of the mistakes I’ve made that I really don’t want my children to repeat.
Ignoring free money
I was very lucky with my first job in journalism, landing a role at a relatively big publisher. And as is the way with most big employers, there was a company pension scheme there at my disposal.
It was a pretty good one too – my employer would match my pension contributions, up to a maximum of 5% of my salary.
But I was young and foolish. The only thing I could think about saving up for was a deposit on a house, not a pension. So for two years I missed out on free money from my old bosses, as well as tax relief from the Government. Given I likely won’t be getting my hands on that money for another three decades, the wonders of compound interest would have made even the smallest contributions a pretty significant sum by the time I actually retire.
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Loyalty doesn’t pay
I opened my first bank account in my early teens when HSBC came into my school, and banked with them for well over a decade. The thought of moving to another bank barely crossed my mind. What was the point?
This is a common mindset, but it’s not a smart one. I could have been enjoying interest on my balance, better customer service, and who knows what else?
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I’ll just pay the minimum
I was a late bloomer when it came to my first credit card, which I didn’t get until I was about 24. However, while I was older I was not much wiser, as I still opted to just pay the minimum payment by direct debit each month.
I wasn’t completely daft though – I’d then top up that payment with some of my leftover cash each month, but I still rarely cleared the balance entirely, instead coasting along constantly £100 or so in the red.
I didn’t waste big sums doing this, but it was still throwing money away unnecessarily.
I don’t keep a budget
I know that I should keep a formal budget, but I’ve never quite managed to get into the mindset of putting a proper one together.
I do normally have a pretty good idea of how much money I have, but keeping it all written down would make those occasional (thankfully brief) dips into the overdraft far less likely.
Take a few risks
I am a (relatively) young man, so I can afford to take a few risks with my pension investments. I don’t though, preferring to keep most of my money in tracker funds. Slow and steady wins the race, right?
[SPOTLIGHT]Except that it doesn’t. And the stock market turmoil of the last few months has been a stark reminder that tracker funds can take a big hit, with all of the gains of this year wiped out within a couple of days.
While you have time to recover, it’s probably a good idea to be just a little more adventurous. I need a better balance in my portfolio for sure.
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I’m not saving enough
I know I’m not alone in this one, but I’m not putting enough cash aside each month either for our savings or for my pension.
Don’t get me wrong, I am putting aside some of my salary for both things each month, but I know full well that it isn’t enough. And given my kids are likely to face even more terrifying retirement prospects than me, that’s not a great habit for them to pick up.
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Piling on the pounds
When I took out my first life insurance policy, my mortgage broker – who was arranging the policy for me – had a very diplomatic way of explaining why it would cost more than the initial quote.
He told me it was down to my “height-to-weight ratio”.
In other words, I was fat. And because I was overweight, I was more likely to drop dead at an earlier age, so I was a riskier bet for the insurer. The same is true with health insurance.
Thankfully my sons are already far keener on fruit and veg than I have ever been!
Season tickets
I have been commuting into London from Hertfordshire for work almost continuously since I graduated a decade ago.
Every employer I have worked for has offered season ticket loans for train travel, where they stump up the up-front cost and you then pay it off every month with a deduction from your pay packet.
Yet until a couple of years ago I bought a monthly, rather than annual, train ticket. Right now a monthly ticket would cost me £288.80, while an annual ticket sets me back £3,008, a saving of almost £500 over a year.
I have wasted thousands of pounds, for no apparent reason, with my train travel.
What money lessons, good and bad, have you passed onto your children? Let us know in the comment box below.