Five financial lessons I learned this year

If someone told me just over a year ago that I would be writing about money, I would have thought they were crazy: the only thing I knew about money then was how to spend it.

Sure, I knew how to make a budget and stick to it, but investing and thinking about pensions… not so much. I love working and staying busy, so retirement wasn’t anything I worried about – it was always tomorrow’s problem. But if I’ve learned anything in the past 12 months it’s that the solution to tomorrow’s problem needs to start today – even in finance.

So I decided to take a look at a few lessons I’ve learned thus far…

‘Millennials want to work for organisations that prioritise purpose as well as profit. It’s as simple as that.’ – Punit Renjen, CEO of Deloitte

1. Compound interest is great: ultimately, Time. Is. Money. If you’re saving and investing for a goal, it will likely take longer than you think, so start now and learn to be patient. Financial security is a lifetime of effort – a marathon not a spirit. And the longer to save and invest, the more time you have to enjoy the benefits of compound interest. What seems like a little amount today can grow into a big amount in the future. So whether it’s £5 each month into your ISA or £500, don’t sweat the amount. It takes time, but as a millennial, time is on your side.

2. Everybody budgets. They may not write it down each month and account for every pound, but everybody – in some way – has a budget. So don’t be ashamed to say “no” to a night out if it’s not in your budget for the month. And those that are good at it pay themselves (and their future) first. The biggest thing that’s changed for me has been when I pay into my savings. Instead of doing this in the middle/end of month if I remember, it’s the first thing I do after getting paid.

3. Being “wealthy” means having enough money to be protected and comfortable. Wealth is not a fixed number and it doesn’t mean being a millionaire. Wealth to me is about being financially secure – being able to afford the necessities and then the little treats that make life fun. There are one or two things in my expenses that would make other people rise an eyebrow, but those experiences directly enhance my personal quality of life and so I no longer feel guilty. Aside from the comfort and stability of a solid income, you can choose to spend money on things that directly enhance your life – but ultimately I’ve found that spending mindfully can make your life feel incredibly rich.

4. Investing is interesting! Ok, so I may have turned into a bit of an investment nerd, but I’ve found myself really enjoying digging deeper into a fund to see how it is invested. From those that are investing in the apps I use on phone, to those that invest in my monthly subscriptions, and those that are actively trying to help solve climate change, I can now relate to investments and better understand how my habits are shaping and being shaped by the investment world.

5. It’s never too late to learn something new. Even how to make your first investment.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.