Money journalist Laura Whateley: My money mistakes
Since I wrote a book about how to better manage money as a millennial I’m frequently asked about my own finances, and one question in particular: have you always been good with money?
The assumption is that I am now, but the honest answer is, it is still and probably always will be work in progress. I know I should go running more, and eat almond croissants less, but knowing what you should do is different from having the self discipline to execute it, right?
Similarly it is one thing understanding how savings accounts and pensions work, another having the control over your emotions and impulse spending to put cash in them.
What I have changed, however, is my awareness of where I am going wrong. I have grown my confidence about money, understanding that despite my allergy to spreadsheets and frugal living mantras, it is a topic for me, just as much as it’s a topic for more "sensible" people and middle aged men in suits.
Here are some of the errors I, and many other people I know, have made over the years, and why they are best avoided.
Not paying attention to my bank balance
In my defence, smartphones had only just been invented when I first started earning money, and I definitely didn’t have enough left in my overdraft to buy one. So it was much easier to ignore how much was going in and out of my current account.
These days I bank with Monzo and Starling and cannot avoid being told exactly how much I’m spending via alert on my phone, which has greatly helped with my formerly ostrich ways.
It always seemed less stressful to avoid actually addressing my shopping habits, but like any task you put off, the longer you leave it the worse the problem becomes. If there is one thing I regret the most, it is not monitoring more carefully where I was needlessly wasting my cash.
Not saving enough into a pension
I have been self employed for years, which means I have not had the benefit of a company pension with employer contributions. Setting up my own didn’t feel like a priority when I was still renting a flat and shelling out for student loan repayments.
Not saving into a pension young, however, has been a big disadvantage. I’ve sacrificed the benefit of free money from the government, in the form of tax relief. I’ve also missed out on the magic of compound interest. The longer money sits in savings or investments, the more it grows. Therefore the younger you start, the less you have to add later in life.
Not investing in stocks and shares
Lots of people fear stocks and shares, but if you have a company pension, you will already have money in the markets. Investing is best done with money you do not need to get hold of in a hurry. You want to leave your investments to grow for at least five to ten years, which means you also take advantage of that compound interest. You can start with small amounts, however. I wish I had done when I was younger, but I assumed investing was only for the wealthy.
Not paying myself first
Another reason I didn’t manage to invest or start a pension young was that I wasn’t very good at saving. Funnily enough, unless you plan ahead how much you want to set aside, there is nothing left at the end of the month.
Now I have given myself time to sit down and work out how much I want and need to save I move that sum into an account that I avoid touching as soon as I get paid. It works (most of the time)!
Not talking about about money
Money is still a bit of a taboo subject. I think we all make judgements about other people based on how much they earn, spend and save, and are therefore cagey about our own money habits.
I also think it is easy to assume everyone else has their relationship with money sorted. I have learned that this is rarely true. When you start discussing your money worries and the blindspots in your financial knowledge with friends and family, you alleviate some of the shame and embarrassment that can surround feeling “bad” with money.
Read more: Six steps to start off investing
Read more: Why I fell in love with renting