It's never too early to learn the basics of money management, even
if you've just started out in the world of work. Whether you're thinking
about banking, insurance, retirement, or investing, here are 10 tips
to keep you on track. So follow these, and you will be well on your
way to making the best use of your money.
- Understand the basics
First, understand the basics. Before you sign on the dotted line,
make sure you understand what you have promised to do (whether its
make regular payments, or commit a lump sum), and what the company
has promised to do (provide a loan, cover a loss or provide a savings
Then, look for exceptions or qualifications to these promises. For
example, an insurer may not have to pay your accident claim if you
lent the car to someone for a few hours.
- Ask questions
When you are presented with a contract, don't be afraid or embarrassed
to ask questions. A reputable product provider should give you enough
time and information so that you can understand the product. You can
also ask to take the documents away, so that you have time to read
them and get advice. Don't be pressured into signing something that
you're not sure of.
- Filing, filing, filing
Anything to do with money often involves lots of paperwork
account statements, contracts, policy documents, terms and conditions
and more. If you're tempted to throw all this paperwork in the bin
stop! Even if you don't read it all straight away, get into
the habit of keeping the important paperwork in a special file that's
easily accessible. It will come in handy if you have a question or
problem about your financial affairs.
You should also get into the habit of keeping notes from any important
telephone calls you have with your finance institution. Again, they
might help if you have a complaint.
Your notes don't need to be a thesis, but it's important to record
basic information such as the name of the person you spoke to, the
date and time, and an outline of what was said. Keep this with all
your other paperwork.
- Reduce your banking costs
Although we gripe about banks, they are still a necessity. But don't
be complacent about your account there are ways that you can
reduce the costs. Negotiate with your bank to get your charges reduced.
As you become more established ask for even better discounts. Use
internet banking rather than visiting the branch, its a lot
cheaper. Ask your institution to tell you about the main fees and
charges, and whether you are entitled to a certain number of free
transactions. You can use this information to help you develop cheaper
- Keep your PIN code secret
Minimise the risk of unauthorised transactions by keeping your PIN
codes secret. Don't tell anyone your PIN or password, even friends
and family. Also, don't keep a copy of your PIN or password near your
card or on your computer, unless it's password protected.
- Watch those debit orders
Debit orders can be a great way of making sure that the necessities
of life like your bills and rent are paid on time. But
make sure you know how to cancel a debit order if you need to. To
cancel it, you should tell both your bank and the company making the
debit (eg your cellphone company). Writing a short letter is often
best. Keep a copy of the letter, and if problems arise, contact your
bank straight away.
- Shop around for insurance
Shop around for insurance like you would for a car. Having a good
insurance policy can make all the difference to your pocket
both now and if you need to make a claim.
When you apply for insurance, you'll have to provide lots of details
to the insurance company. For example, if you are getting car insurance
you may be asked about your driving record, whether the car has been
modified, and other things. Your answers will help the insurance company
decide how risky it will be to insure you, and therefore how much
your policy will cost. Don't be tempted to fudge the facts! If you
do, your insurer may have grounds for refusing to pay your claim.
- Think about insurance before buying a car
You might think that, if two cars cost the same amount to buy, they
would cost about the same amount to insure, but the cost of insurance
often depends as much on the type of car as it does on the cost.
For example, a sporty car might look great, and impress your friends,
but it could cost you rather more to insure than a basic model. It's
better to be prepared for these extra costs than to get an unpleasant
surprise after you've bought the car.
- Spotting scams
If you're thinking about investments, you need to think about what
level of risk you are prepared to take. The higher the return, the
higher the risk that you will lose all your money. Remember that there
are no easy ways to "get rich quick". Stay away from investments
that promise incredibly high returns for low risk and little work.
They are usually scams.
Other warning signs for scams are: lots of exclamation marks and capital
letters in the advertisements and no physical address, just an email
address or post office box, and lots of assurances that the scheme
is legal. Be cautious. If you think an investment opportunity looks
a bit dodgy, make some enquiries before you commit your money. Talk
to a financial adviser if you are in doubt.
- Save for retirement
If you are just starting your working life, retirement will probably
be the last thing on your mind, but if your employer offers you a
savings plan through the company you should take them up on it.