Achieving financial independence is a rite of passage for all young people. Sooner or later, most 16 to 25 year olds will have to take responsibility for their financial arrangements, making important decisions that will shape their lives in the years to come. This could be funding their way through university and navigating the world of student loans and tuition fees, beginning a first job, or even moving to a place of their own. The problem, however, that many young people (and their parents) face is that each of them will have different requirements, budgets and levels of understanding of money matters and it can be difficult to address these issues before they become a concern. All too often this is because of the lack of financial advice available for this age group.
“#yourmoney: everything you need to know about earning, spending and saving ”, is a new guide which aims to do vanquish these obstacles – to teach young people about some of the jargon and terms they are likely to encounter and helps them make financial decisions with greater confidence. Jeannette Lichner, the author, who has had a long and distinguished career in finance, is well qualified to shed light on some complex terms, such as pensions, savings accounts, including ISAs and is even able to explain the difference between AER and APR!
There are helpful tips on just about everything from budgeting, to using credit cards, to understanding the tax which is coming out of your monthly salary. Other useful areas covered are insurance and buying a car. Visual elements in the book help too: Lichner doesn’t just talk us through a credit card statement, or a payslip, she actually includes one as an example. The same goes for budgeting, as we see how a budget might look on a spreadsheet. In fact, the instructions we are given on how to make up a budget are so rigorous and easy-to-follow, covering the entire spectrum from collecting and recording receipts, to dividing expenditure and income into categories, that it seems successful money management is a job in itself.
And this drums home the fact that almost all decisions you make and actions you take are related in some way to money management. As the book says, “Every time you use your mobile for a call or a text, or hop in the car, you are spending money”, and it therefore follows that you should keep track of everyday expenditure, such as the mobile contract you are on, or how often you eat out. However you choose to make or spend your money, you are always going to have to manage it, and you are usually going to have part with a large portion of it to pay for essentials such as bills, rent and council tax, unless you are lucky enough to still be supported by your parents.
In my opinion though, the feature of this book that sets it firmly apart from other how-to guides is the recognition that money management is intrinsically linked to a person’s upbringing and mind-set: the environments they find themselves in, the people they associate with, the career aspirations they have. Many of the financial decisions we make are influenced by the values we attach to money. Some of us may be savers by nature, others may be spenders, but unless you understand why you spend money and where you spend it, financial knowledge alone is not enough.
“#yourmoney” goes a long way to helping young people understand all aspects of money management – and is surely a must-read for anyone embarking on the journey towards financial independence.