Things they don’t teach you in School about Personal Finances and Saving

Becoming financially independent is one of life's biggest lessons. Get money-savvy with some of our tips and suggestions...

Budgeting, saving money, and living comfortably within our means are all things we learn as we go through life. Here are some financial buzzwords that we think you need to be aware of and prepared for, to protect your financial well-being when leaving school or college:


Think of your credit reports like a diary of all your borrowing and financial behavior. Credit history is based on a points scoring system and is tracked from the day you turn 18. Any money you borrow as an adult (e.g. phone contracts and credit cards ) will affect your credit score, so it is important to stay on top of it. Some ways of checking your score are through ClearScore, Equifax, and Experian. Credit referencing agencies all measure things slightly differently – so you’re likely to have a separate score with each. A low credit score might make it hard for a lender to accept your application. This is because they will see you as a risk. Find out more about credit history and what can affect it, in one of our previous blog posts.

Saving for the future

It is important to set money aside so you are prepared for life’s little (and big) hurdles. Mortgages, cars, starting a family, and weddings are just a few parts of life that usually take a while to save for. If you have not got savings or funds set aside, you could end up struggling financially to keep up.

Getting on the property ladder is expensive. The property market is constantly on the rise, house prices and monthly rent costs are the highest they’ve ever been. To give you an example, the average price of a house in London is £655,840 (as of August 2021, via Zoopla), and the average rent in the U.K. costing £1,007 per month (the highest it’s ever been, according to HomeLet). However, you can achieve this with good budgeting skills and regular savings.

Cost of living

Whilst in education, public transport is free or discounted, and many young people rely on their parents for food and clothing. This may leave them unaware of the true costs of everyday life. It seems obvious, but food shopping, buying new clothes, and having a social life all need to be within the budget. Daily life can come with costs we are unprepared for, make sure to always have some money saved for things you may not have considered.

Some teenagers will start working when they turn 16 or find full-time work when they’re out of education. This is when they will get their first taste of income tax. Tax is deducted when you earn over £12,500 per year (2020/21). Currently, if you earn between £12,571 and £50,270, you’ll pay 20% – known as the basic rate. Between £50,271 and £150,000, you’ll pay 40% (known as the higher rate). Above £150,000, you’ll pay 45% (the additional rate).

Work out your tax >>

In London, we are lucky to have TfL as our trusted transport network. Unlike other cities in the UK, TfL offers Londoners cheap prices for travel, with a bus journey only costing £1.50. However, if you land yourself in a job where you need to commute into another London travel zone, you will need to budget for the monthly costs. This is often between £100 – £300 per month, depending on your journey.

Loans & banking

There are plenty of options for borrowing money, like loans, contracts, and credit cards. For many people, a loan will not be the best option, but for some, this is a great way to cover expenses and pay them back gradually over time. All loans come with an interest rate, so ultimately you will end up paying back more than you have borrowed. You are likely to get the best rates if you have a good credit score and regular income.

Financial independence is an important part of becoming an adult. Having access to your own bank account and funds will help to create healthy financial behaviors. You must have your own current account when you start earning money, so employers can pay you. Current accounts are used for most everyday banking. They usually come with a debit card which is how you access your money. You can use your debit card online and in shops.

It would also be a good idea to set up a savings account alongside your current account so you can save money that you are less tempted to spend. A savings account, unlike a current account, does not come with a debit card. Savings accounts hold money that you intend to save, rather than spend. You can easily check your transactions, account balance, and savings via an online banking app.

Scams and fraud

Stay aware of scams and fraud. Criminals will often target people using emails and texts messages containing unsafe links. It is important to be aware of the risk of these types of scams, as you could end up losing a lot of money. Studies show that people who think they’re least likely to fall for scams tend to be the ones most likely to be caught out by them. Make sure to be careful, no matter how legitimate a link or message might look. Take a look at some of our previous articles on recent scams to be aware of.

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Holly Hunt

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