Irish Financial Review

10 things every parent should teach their 7-year old child about money if they don’t want them to grow up broke!

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Research shows that kids as young as age 7 begin to form life-long money habits. Following are some simple steps adults can take if they want to ensure their 7-year old child develops a good relationship with money that will last them a lifetime:

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How poor money skills destroy career options for undergrads

By Frank Conway

As the college examination period fast approaches, now is the perfect time to look at a major global issue that can have a significant life impact for every student.

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The sooner college undergraduates learn good financial skills, the better for their life-long career and life choices

Ever wonder why some people have all the luck in life? Or appear to? Well, sometimes, it may not be down to luck at all. In fact, in many cases, career success can be as a result of long-term planning and some important choices taken early in life.

And early intervention is becoming more and more critical, especially where money is concerned.

Rise in predictive algorithms

Across the globe, the rising use of a predictive algorithm on how we use money is becoming central to making predictions about our financial personalities. This is generally referred to as credit profiling; where how we pay our debits and other bills in the past is being used to predict our future financial behaviour. In other words, each of us is summarised as a three digit number and this number represents how trustworthy we will be with money.

Difficult to escape the net

For most Irish undergraduates, if they plan to live and work abroad, the countries most popular are the UK, the USA, Australia, Germany and Canada. But in each of those countries, a tightening net of financial information means that it will be difficult to escape the data net. In the UK, USA, Canada and Australia, global companies such as Experian, Exquifax, and Trans Union all have some major presence in mining personal financial information. Even in data-sensitive Germany, the much dreaded SCHUFA holds and manages credit information on over 66 million ‘natural persons’. And the data managed is enormous with far reaching consequences. But even here in Ireland, there is little escaping the credit net with a new, more robust Central Credit Register due to begin replacing the existing Irish Credit Bureau (ICB) in 2018.

Far-reaching life consequences

Personal credit information has far reaching consequences for today’s undergraduates. Unlike 20 or even 15 years ago, the use of personal credit information today is far more advanced and used by more and more stakeholders. Those include:

  • Insurance companies – credit information is linked to driving premium calculations where those with good credit profiles are more likely to get the best deals.
  • Hospitals – in some US cities, hospitals are likely to request a personal credit check before admittance. In some cases, hospitals may refuse admittance if they suspect that any resulting medical bills may be at risk of going unpaid.
  • Landlords – in many cities outside Ireland, landlords routinely request personal credit checks as they evaluate prospective tenant applications. Those with the best credit profiles are more likely to get the property they want.
  • Employers – many employers, especially in financial services but also in other positions of significance can require that applicants not be under undue financial stress. In financial services, this is done to ensure applicants pass so-called Fitness & Probity rules.
  • Credit – and let’s not forget the original purpose of personal credit reports; to assist credit providers such as banks and credit unions evaluate loan applications.

3 simple steps to protecting your personal credit profile

For today’s college undergrads, knowledge is power. In fact, they are in a prime position to ensure they protect and grow their personal credit profile if they do the following:

  1. Be informed – this comes down to how much they earn, how much they spend and how they can avoid making financial mistakes that can damage their personal credit profiles and financial reputation.
  2. Be patient – throughout life, they will need to develop the skills of money management and this takes time. But by learning to budget and manage money, those skills will lay the foundations to a strong financial future, and positive personal credit profile.
  3. Be humble – this is critical. All too often adults fail to ask important money questions simply out of fear. But broad and deep money knowledge escapes most adults so it is important that undergraduates remember to ask the questions that may seem ‘silly’. After all, there is never a ‘silly’ question when it is a matter of protecting your credit profile.

Frank Conway is a qualified financial adviser and Founder of MoneyWhizz, the financial literacy initiative.

Watch this 5 minute video on personal credit reports 

8 Step Plan to Saving for Your Money Goal

By Frank Conway

Founder, MoneyWhizz

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It is important to allow time to achieve your financial goals

It’s never too early to start planning for the things you want to achieve in life. And depending on what those plans are, some will require more planning than others. In fact, the following 8-point plan could be used to prepare to run a marathon as much as to prepare and buy a car, or fund further education or even start your own business. So here goes:

  1. Set your personal goals and make a plan – Studies prove that goal setting and planning are incredibly effective are delivering positive results.
  2. Recognize your limits – in the case of money, recognize your limits but be prepared to maximize your potential (like reducing wasteful spending and redirecting your financial resources).
  3. Increase your financial knowledge – this will empower you to make informed financial decisions.
  4. Start early – The longer you wait, the more difficult the first step becomes.
  5. Save & invest on auto-pilot – Set up automatic savings deductions as money you never see is rarely missed.
  6. Learn and adjust – if you start to earn more money, increase your savings (and reverse it if your earnings reduce). Remember, life will have ups and downs and your plan will need to have some flexibility if you want it to be a success.
  7. Avoid minimalism – If your plan is to save a certain amount of money, try and over-save a little as a buffer in case things can go wrong later.
  8. Stick to the plan.

Remember, patience is a virtue when it comes to any plan and the longer the plans is for, the more patience you will require. But if you have the financial capacity then the rest is very possible. So best of luck with your plan and achieving your money goal!

MoneyWhizz is the leading financial literacy provider in Ireland and publishes engaging content for primary, secondary, third level schools and colleges.

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