Five ways to work your money brain

10 July 2018
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It’s results day for many 10- and 11-year-olds who will be anxiously awaiting the scores from their Key Stage 2 SATs, which they completed in May.

The good news is that there’s a strong chance around 75% of them will achieve the level that’s ‘expected’ in maths by the age of 11.

However, anyone whose children sat exams this summer knows that in an effort to improve maths scores, an awful lot of work has been done to engage children with the subject. The rising numbers of children reaching these increasingly stretching ‘expected’ levels is a testament to that.

The trouble is that in far too many cases, these maths skills don’t stick: the government’s ‘Skills for Life’ survey in 2011 found that almost half of all adults don’t have the numeracy skills we expect of 12-year-olds. In fact, between the ages of 16 and 24, over half (56%) of people fall short of the level of maths expected from a 12-year-old – and almost a quarter don’t have the level expected of a 10-year-old. The government suggested this may be because we learn information for tests, and then let ourselves forget it.

But as long as people engage with money and maths as they go through life, they can pick up the key skills they need to manage a household budget and plan for the future.

Below are my top five tips on how you can work your money brain. You may have thought that once you’d finished education you wouldn’t have to worry about this kind of homework ever again. However, while you may never be called upon to sit a written exam, your financial life is essentially one long practical test. By retaining hard-earned maths and money skills, and picking up knowledge and experience along the way, you can ace this exam too.

1. Do more maths than you need to

Most people carry calculators around on their iPhones at all times, so you can get away without doing any mental arithmetic. However, the more practice people get, the easier they find it, so you’ll be more inclined to engage with everyday calculations – such as whether a discount is worth having.

If you’re rusty, there are quick exercises you can do to get started, such as adding up the shopping in your basket as you go along, or working out how long a queue is going to take – to keep your brain ticking over. 

2. Pay attention

Most people drift through the month, not entirely sure where their money goes, or why they run out. You can turn this around by keeping a spending diary and checking your account every day. This will force you to make space in your brain for your finances, so when you are faced with spending a choice, you’re far more likely to be making an informed one.

3. Have a plan

Once you are on top of your budget, you’ll have the confidence and knowledge to look further ahead. It’s worth getting to grips with short-, medium- and long-term savings goals – such as saving for Christmas, building an emergency fund of three to six months’ salary, and putting money away for retirement. Once you know what your target is – and when you want to achieve it – you can work back to see how much money you need to free up to save for the future.

4. Learn as you go along

When it comes to saving and investing, all the information you need to choose the right investments is available for free. It’s just a question of finding out how you like to learn, and making time to pick things up. Some people like to immerse themselves in a book, while others prefer watching videos, or reading short guides and articles. 

You don’t need to be an expert from day one. You can, for example, invest in a low-cost UK tracker fund and commit to using your experience, and some background learning, to build from there.

5. If you’re struggling, ask for help

Most people don’t learn about savings, investments and pensions in school. There’s therefore no shame in asking for help. If you are making a significant financial decision, you may want to take advice. Otherwise, you can pick up the phone to a provider, or approach an independent body such as Pension Wise or StepChange. You may not be able to get independent financial advice from them, but they do offer guidance and you can ask as many questions as you need until you feel confident in your choices.

Sarah Coles is a personal finance analyst at financial provider Hargreaves Lansdown.