There are always defining moments in our lives, being born and then the subsequent birthdays afterwards are a few.
However, many of these defining moments involve money. While money may seem so sordid, and the last thing we wish to discuss, the facts ring true. There are many times in our lives while we may not be thinking of money, but it is thinking of us.
And it does all start in our early years.
You can call it pocket money or an allowance, it is all the same; money parents give to their children, usually on a weekly basis.
This is usually our first experience of having and handling money.
Some parents/households have attachments that are associated with receiving the pocket money that may be called chores. A child may be expected to clean-up their room, make their bed, take out the rubbish, etc, and in doing so they receive a small sum of money.
When you think about it, it is almost like our first job in a sense, we do our “jobs” and we get paid.
Receiving pocket money can be a big step in a child’s development of how they view and handle money.
Some children have a natural instinct to save some of their pocket money, perhaps for a larger purchase down the line. Others may just spend it all on sweets and other treats each week saving nothing.
There are some components to giving children pocket money that can lay the foundation for future relationships with money:
* Learning to save money, delaying immediate gratification for a larger purchase.
* Interaction with others in a social environment, such as going out with friends who may or may
not receive any allowance.
* Understanding the value of money and what it can purchase.
* The implications of not having any money.
* Understanding the correlation between doing your chores and getting paid.
As you can see, our first introduction to money can set the foundation for how we view money and our finances later in life. That is not to say other life events may have a huge affect as well.
You will see, if you have read a head, I have titled this “first job” and I also have a title “first real job”.
A job/work is a job/work, but for many of us we our first job may be working somewhere part-time. When I was growing up the majority of us worked in the fast food industry.
After school and on weekends we worked at McDonalds or Burger King, or some other fast food restaurant.
It was almost a rite of passage working at these restaurants. And it was real work as well.
What these first jobs do is help in learning discipline and can also bring out initiative and other qualities that can be helpful and used later in life and our careers.
We also learn about payday.
Payday is and always will be a big day for all of us, for the rest of our lives.
Not only do we learn about delayed gratification, as we may have to work a week, or even a month before getting paid, but we also learn a bigger lesson, we learn about taxes.
Unless your job pays you “cash in hand”, the tax man will get their share of your wages.
It can be a shock to some when they see their wage slips and learn that not all they earned is theirs to keep and spend.
And spend is what we do. We now have a little job, making a few bob, and we want to spend it.
For some of us, the bank of mum and dad are happy we have our little job as well, as it means no more, or less, pocket money they need to pay.
It is how we handle this new earned money, that can also impact how we handle finances later on in life.
The first job is a big step financially.
I bring up savings as a key financial time in our lives at this point due to the fact that now that once we have a job, we may begin the process of saving some money. The whole saving for emergencies or just delaying gratification and saving up for a large purchase.
It is highly unlikely at this juncture of our lives we are thinking too far a head, so any savings we may have would no doubt be for a purpose. Maybe a nice mobile phone or a tablet computer, or something we cannot just ask mum and dad for.
Learning the habit of saving money is important, and one we all need later in life. This key financial time may also tie in with when you get your first bank account.
First Real Job and Living On Your Own
Here’s where life gets interesting, and one of the major key financial times in our lives. When we have our first real full-time job, and live on our own away from mum and dad.
It may be after a few years at university, and you now have your degree and are entering the work force in your learned occupation, or just the first time you move out to live on our own. This is a key financial time.
Not only are you working and are responsible for what work you do, your earning more, and also have the responsibility of paying bills.
You may have experienced this some what if you went to university, but you are on your own now.
You have rent to pay, council tax to pay, electric, gas, food, all the usual bills and expenses associated with life, and you are the one to handle them all.
This is where many of us learn to budget our money out each month. Since many of us are only paid once a month, we need to learn how to make sure we have money to last us until the end of the month.
I mention this as it is a key financial time due to the saving for a car, and the expense of running one. It usually will occur when you have your first “real job” as it may be then that you can afford a car and the expenses associated with running one.
As a young driver one of the largest expenses associated with having a car, and it can be quite a shock, is the cost of insurance. If you wish to drive a car, insurance is required by law, and for new and young drivers, it is not cheap.
You also have the expense of petrol, tax disc, MOT, and also any repairs and maintenance the car may require.
Having your own car gives you a lot of freedom in travel and how to get where you want to go, it also brings about with it a huge financial responsibility.
I mention getting credit here, as it may be the purchase of your first car that sparks the need for credit, meaning you need to finance the car.
Many of us at a young age don’t think much about getting credit, however, at some point in our lives, we will probably need credit.
Credit comes in the form of a loan. It can be a loan to buy a car, buy a property, or in the form of a credit card or overdraft.
The first time you apply for credit, the lender may ask you for a co-signer or guarantor. Someone close to, a family member or friend, who will state they will make the payments should you fail to.
Getting credit for the first time is a key financial time, especially when we receive our first credit card. For some reason getting that first credit card is a sign we have arrived as an adult and are credit worthy.
One of the most important financial times of our lives, buying our first house. It also for the majority of us, will be the most expensive item we will ever buy, and the largest loan we will ever take out, a mortgage.
The process of getting a mortgage may seem daunting, but in reality it is not as complicated as some might seem.
Once you are approved for a mortgage, you should be in the best financial shape of your life.
The mortgage lender has reviewed your credit and credit score, checked your employment, your debt levels are low, or within an acceptable range, and you have saved up a deposit, so you have shown a pattern of savings.
Financially, you are at your peak.
Marriage or Partnership: The Co-mingling of funds
Marriage or living with a partner, and getting on the property ladder, can be interchangeable. Meaning you can do one, before you do the other.
However, meeting someone, falling in love, and getting married or living together is another major financial key in our lives.
If you get married you have wedding expenses such as engagement and wedding rings, the dress, the venue, catering, the list is long and costly.
Regardless of getting married, living together is a big financial challenge in itself. You have to decide how and who is paying what bills. Do you open a joint banking account, what debts do you each have already, does one person have poor credit, financially there is much to discuss when living together.
When you discuss marriage and/or living together, for some the next stage is having children.
How the spawn of our lives changes our financial way of thinking. It is no longer about us, but about them. Being a grandparent is no different, except you can spoil them, and give them back to their parents:)
And with the average cost of raising a child to be around £230,000, they are another of our life’s key financial times.
Just as getting married is a big financial deal, so can a divorce. As complicated as it is to intertwine finances with someone, it can be even more complicated separating those finances, in part due to the emotional impact of getting divorced.
If there are marital assets, such as property, these need to be divided, and if there are jointly held debts, decisions need to be made as to who pays what, keeping in mind in jointly held accounts, both parties are equally responsible.
If one party as a part of the divorce is to pay an account, and they fail to do so, it affects the other person’s credit as well.
Getting divorced, depending on how matters are handled, can be a time when people with good credit ratings lose the good rating.
Divorce is also an additional expenses as you both are now paying for two separate households instead of just one.
Redundancy or The Loss of a Job
Just as getting a job is a key financial time, so is the loss of one.
Being made redundant, or dismissed for cause, when you lose your job, your finances change drastically.
This can be through illness as well, if you are no longer able to work.
When you lose a job, and the wages that go with it, life needs to change financially as we have gotten used to being paid, and may of us have not just the regular monthly bills to pay, but we may have debts, credit cards, loans, a mortgage, all that require payments each month.
If we have been prudent with our finances, we may have some emergency savings in place to tide us over until we can find a new job.
If we don’t have any savings, and/or cannot find suitable work in time, we may be looking at one of life’s difficult financial lessons, in the form of bankruptcy.
Debt Repayment Schemes/Insolvency/Bankruptcy
If you are faced with one of the worst key financial times in a person’s life, such as when they cannot afford to repay their bills and debts, through whatever reason, then you may be facing insolvency.
You need to get professional help when this occurs.
There are options in dealing with these trying financial times:
* Token Payment Plan
* Debt Management Plan
* IVA/Individual Voluntary Arrangement
* Debt Relief Order
When you retire from the working world it is one of your last key financial times.
Your income will be changing, possibly reducing, and it is hoped that by the time you retire, your mortgage if you have one, is paid off, as should any other debts you may have.
You also need to make sure you have enough in your pension to be able to retire.
Many would agree that when we die it is an important time, especially to us as we are the ones dying, but as a key financial time, some may challenge this.
It is however our last key financial time.
There are expenses associated with dying, such as a funeral and burial.
Many people have life insurance in place to cover these expenses, and also if we wish to leave some money to friends and family.
As I stated in the beginning of this little journey through life’s key financial times, we may not always be thinking or discussing money, but it there, even if just in the background, throughout our lives.
,There are always defining moments in our lives, being born and then the subsequent birthdays afterwards are a few. However, many of these defining moments involve money. While money may seem so sor
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