Financial literacy

[EpsomWolf]

I haven't told anyonene to do anything.

That’s fair enough, I’ve re-read the post and you didn’t, apologies.

I thought your suggestion it is “simple to get financial freedom” misleading and a touch insensitive to those working bloody hard and fearful they might never achieve that.

As you know yourself compound growth is where the real benefits lie, property, pension, alternative investments and so on, and starting too late leaves you in big, big trouble. However, far too many people are unable to get started on any of those because the day-to-day outgoings are already wiping everything out.

By all means educate people to use their resources wisely, and I’ve little time for those who don’t, but for some people financial freedom is far from simple.

Edit: and apologies for the use of ‘lecturing’ that was unfair and I’m sure I’ve been guilty of that myself.

 

[Haggstone]

Its simple, not easy. Big difference, to me anyway. I know how hard its going to be for my sons generation, that's why I'm doing what I'm doing.

 

[Haggstone]

That’s fair enough, I’ve re-read the post and you didn’t, apologies.

I thought your suggestion it is “simple to get financial freedom” misleading and a touch insensitive to those working bloody hard and fearful they might never achieve that.

As you know yourself compound growth is where the real benefits lie, property, pension, alternative investments and so on, and starting too late leaves you in big, big trouble. However, far too many people are unable to get started on any of those because the day-to-day outgoings are already wiping everything out.

By all means educate people to use their resources wisely, and I’ve little time for those who don’t, but for some people financial freedom is far from simple.

Edit: and apologies for the use of ‘lecturing’ that was unfair and I’m sure I’ve been guilty of that myself.

I appreciate that mate thanks.

 

[Dennisons Wrong Foot]

Retired 18 months ago and we are not wealthy, but definitely okay. I have worked long hours all my life, live frugally, and have no kids - but our financial security is all down to luck.
Parents gave me a large deposit on a house, which then doubled in value in 6 years. Bought a run down liquor store dirt cheap, made a loss for a couple of years, gradually built it up as the economy improved, did really well during covid, then sold it at the right time.
Without help from parents none of this could have happened. Not good judgment, not hard work, just luck.

 

[sycophantia]

Retired 18 months ago and we are not wealthy, but definitely okay. I have worked long hours all my life, live frugally, and have no kids - but our financial security is all down to luck.
Parents gave me a large deposit on a house, which then doubled in value in 6 years. Bought a run down liquor store dirt cheap, made a loss for a couple of years, gradually built it up as the economy improved, did really well during covid, then sold it at the right time.
Without help from parents none of this could have happened. Not good judgment, not hard work, just luck.

Sounds like you worked really hard to me, some luck too of course.
We did similar except instead of a business I just worked shifts/long hours in manucturing.
Most of my working life there was no works pension scheme for me, a mate of mine worked for the 'Pru' and virtually bullied me into starting a personal pension, I'm so glad he did cos otherwise I'm not sure I'd have got round to it and we'd have been in the shit now, I probably would have had to work till I dropped.
As others have said, it should be part of the school curriculum. Obviously some will still fall through the cracks and circumstances will mean not everyone will end up comfortable in their retirement.

 

[EpsomWolf]

Retired 18 months ago and we are not wealthy, but definitely okay. I have worked long hours all my life, live frugally, and have no kids - but our financial security is all down to luck.
Parents gave me a large deposit on a house, which then doubled in value in 6 years. Bought a run down liquor store dirt cheap, made a loss for a couple of years, gradually built it up as the economy improved, did really well during covid, then sold it at the right time.
Without help from parents none of this could have happened. Not good judgment, not hard work, just luck.

You were fortunate to have a leg up, but from that moment onwards sounds very much like good judgement and hard work. Luck always plays a part but it’s wasted if you don’t play your hand wisely.

Loads of people would’ve been idiots in that situation and blown everything. It why we’re always fighting against personality types when talking about education around financial planning and why outcomes vary hugely and are vastly disproportionate to people’s opportunity,

 

[Haggstone]

If the government put say £4k in a trust fund for every child born, assuming 10% growth, that's £2.5 million 65 years later just by leaving it where it is. No government is doing that though.

 

[Hereford Wolf]

you've been genuinely poor then that tends to give you a healthy respect for money.

I think this is true. My first marriage was a disaster financially. We bought a house we couldn’t afford and literally were looking at being down to 50p in the bank with pay day two weeks away. In a load of debt. Couldn’t afford heating or electricity.

Anyway, moving on, I got divorced. Found a really good job for the first time in my life at the age of 40. Great pension scheme. Moved away from Wolverhampton to start a new life. Bought a tiny house in Gloucestershire.

Everything moved on from there. Met Mrs HW. We were not wealthy by any means but we were so sensible with cash and savings it was almost boring!

Now retired, on a good pension and very comfortable.

It’s never too late to turn things around.

 

[Tredman]

If the government put say £4k in a trust fund for every child born, assuming 10% growth, that's £2.5 million 65 years later just by leaving it where it is. No government is doing that though.

There was literally a child trust fund for exactly this - wasn't 4k put in, think it was 250, then parents could add on. Tories binned it.

 

[EpsomWolf]

That was the coalition government ditching it and the fund wasn’t for 65 years securing a future, it matured at 18. I suppose that would at least give everyone some sort of a leg up but it’s not difficult to imagine the different outcomes when giving every 18 year old the same lump of wedge.

 

[Tredman]

That was the coalition government ditching it and the fund wasn’t for 65 years securing a future, it matured at 18. I suppose that would at least give everyone some sort of a leg up but it’s not difficult to imagine the different outcomes when giving every 18 year old the same lump of wedge.

I thought the original plan was to encourage 18 years olds to transition the money into a LISA?

 

[EpsomWolf]

I’m not sure to be honest, I’m a bit hung up on wasted opportunity so struggling to see past the risks involved in giving 18 year olds a load of cash with a BMW and a month in Ibiza winking at them while trying to encourage them to transition to LISA’s and so on.

Not sure what the answers are but financial prudence/planning through early education would be a good start.

 

[Haggstone]

I’m not sure to be honest, I’m a bit hung up on wasted opportunity so struggling to see past the risks involved in giving 18 year olds a load of cash with a BMW and a month in Ibiza winking at them while trying to encourage them to transition to LISA’s and so on.

Not sure what the answers are but financial prudence/planning through early education would be a good start.

This is my biggest fear with what I'm doing. My plan is to get him involved from the age of 8, encourage him to put his pocket money into it himself too so he can see it grow and the impact he has made. If I hand him the keys at 18 with no transition than i'm asking for trouble.

There's only so much mitigation you can do, at some point you gotta let them live their life.

 

[Tredman]

This is my biggest fear with what I'm doing. My plan is to get him involved from the age of 8, encourage him to put his pocket money into it himself too so he can see it grow and the impact he has made. If I hand him the keys at 18 with no transition than i'm asking for trouble.

There's only so much mitigation you can do, at some point you gotta let them live their life.

You could put it in a penson, but what we call wasting money might actually give them a lifetime of memories.

 

[AndyWolves]

This is my biggest fear with what I'm doing. My plan is to get him involved from the age of 8, encourage him to put his pocket money into it himself too so he can see it grow and the impact he has made. If I hand him the keys at 18 with no transition than i'm asking for trouble.

There's only so much mitigation you can do, at some point you gotta let them live their life.

Why not keep it in your assets (assuming you're not hitting limits)? You can keep control then (not withstanding IHT rules)

 

[Haggstone]

You could put it in a penson, but what we call wasting money might actually give them a lifetime of memories.

Absolutely, I want him to be part of the process, I want him to make mistakes....and you know what if he blows it all, has a blast and learns from it, then I take that over him getting into loads of debt.

 

[b3h]

If the government put say £4k in a trust fund for every child born, assuming 10% growth, that's £2.5 million 65 years later just by leaving it where it is. No government is doing that though.

How does one go about getting 10% without it being some form of investment account/ISA?

 

[AndyWolves]

How does one go about getting 10% without it being some form of investment account/ISA?

If it's in a trust you (the trustee) can choose how it would be invested, and as it's in a trust it has different tax rules compared to something owned by an individual. One would think the govt would make it exempt from CGT / income tax.

Kind of moot though now with the creation of Junior ISAs, the govt could easily open a JISA and fund it when a child is born.

 

[Dennisons Wrong Foot]

Am actually very Illiterate with financial planning. Was going to claim state pension from today (67th b-day), but didn't speak to anyone until 2 weeks ago. Don't qualify for full amount, waiting for info on how to top up (if possible). Called Aviva last week and on the spur of the moment decided to leave my small pot for 4 more years.
Only recently found out I qualify for US social security even though I haven't paid in. But haven't looked into pros/cons of pensions from 2 countries.
This thread is a good reminder to get up off my backside and speak with an expert. But Wolves play today, then busy for a few days, don't like paying people for advice, etc. Maybe next month.

 

[AndyWolves]

Am actually very Illiterate with financial planning. Was going to claim state pension from today (67th b-day), but didn't speak to anyone until 2 weeks ago. Don't qualify for full amount, waiting for info on how to top up (if possible). Called Aviva last week and on the spur of the moment decided to leave my small pot for 4 more years.
Only recently found out I qualify for US social security even though I haven't paid in. But haven't looked into pros/cons of pensions from 2 countries.
This thread is a good reminder to get up off my backside and speak with an expert. But Wolves play today, then busy for a few days, don't like paying people for advice, etc. Maybe next month.

It's worth mentioning that for people who've missed NI payments you can back date them so you get the full state pension. It's time bound now but worth checking, as the cost of topping up your NI contributions is less than what you'd get for state pension. Especially as the state pension will rise (for now) in line with the triple lock. It'll never be cheaper than it is today (due to inflation) to top up your NI contributions.