Some classes from school stick with us – Henry VIII’s wives, types of rock, food shopping in French. But honestly, as working adults, who wishes they knew more about ISAs, investments and tax? More than half of us, according to a new survey, which found that 55% of 18 to 34 year olds are, well, pretty clueless. So we asked the experts what they would teach for an A-level in Money Savvy. Exercise books at the ready.
Shop around for a new bank
Our first error? Just 3% of us move to a rival bank every year, “but some will pay you up to £150 to switch over”, says Johanna Noble of . And, thanks to most banks’ Current Account Switch Service (CASS),changing is faff-free: simply sign up and they’ll transfer everything within seven working days. The catch? You may need to add a certain amount to your account each month. While First Direct will give you £100 to come to them, they also charge a £10 monthly fee after the first six months. However, one way you can avoid this is to pay £1,000 into the account every month.
Homework: Check out the best bank bribe for you at
Face your debt demons
Student loans, credit card repayments, overdrafts: managing outgoings can be a minefield. “Make a list of what you need to pay off in order of interest rate,” says Clare Francis, Barclays’ savings and investments director. “By prioritising the highest rate, rather than amount owed – so, a £150 credit card bill could come before a £500 overdraft – your debts are less likely to spiral.” Next, you need a budget; that’s where Budget Brain at comes in. It’s a free, no-BS tool that sets realistic goals. It takes an hour to fill in, but it’s worth it when those outgoings decrease.
Homework: Download the Wally app (free on the App Store) to upload receipts and keep track of spending.
Get a first-time buyer’s boost
The cost of mortgage deposits can leave us crying into our payslips, but there is good news. “Open a new type of ISA – a savings account you never pay tax on – called a Help To Buy ISA by November 30, 2019, and you’ll earn high interest [such as 2.27% with Barclays],” says Johanna. “Plus, when you come to buy, the government will add an extra 25% of what you’ve saved to the total.” To cash in on this reward, you need at least £1,600 in your account and the maximum bonus is £3,000 (for which you need £12,000 saved). “Withdrawals can be made at any time,” adds Johanna. “You just won’t earn the bonus if you’re not buying.”
Homework: Use the calculator at helptobuy.gov.uk to work out how much the government will give you.
Know your rates
“Most of us don’t stop to consider where our savings sit, potentially missing out on extra cash,” says Clare. “Try a fixed-rate account, where your money is untouchable for a certain period (often from 12 months). The interest rate is higher than it is for an easy-access account, from which you can withdraw at any time.” Right now, Secure Trust Bank is top of the class, with its 5 Year Fixed Rate Bond offering one of the highest interest rates (2.20%) for a minimum deposit of £1,000.
Homework: See which fixed-rate accounts get top marks at
No, you don’t have to be rich. Charlotte Oates of the app Moneybox says even a quid can grow quicker than you think. “You can use the app to invest in stocks and shares with as little as £1. Just specify how much you’re putting in and it will track the performance of the stock market, investing your money across different companies, such as Netflix and Disney.” Your returns depend on the stock’s value, how much you invest and for how long. “In April 2016, I invested £1,000 using the online service Wealthify, adding £20 a month since,” says Laura, 27, a psychology student. “After ten months, my total investment of £1,200 has grown by £84.”
Homework: Sign up for The Motley Fool’s free email report on how to be a successful investor ().