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What if Personal Finance Had a User’s Guide?
There’s a lot that goes into financial stability — and it seems out of reach for many of us. Laura Whateley’s new book, Money: A User’s Guide, cuts through the panic and gives readers the confidence they need to take back their financial goals. Designed to read like an instruction manual for personal finance, we think this book needs to be added to every high school curriculum.
Whateley not only covers topics like credit scores and saving money but also dives into money, love and mental health — enabling readers to use what they learn to thrive in all parts of life.
Where do you think most people go wrong with their finances?
There’s a perception that finance is a complicated and daunting area, that it’s mainly for those who are great with numbers or really good with spreadsheets. Actually, for most of us, the basics around money are straightforward and accessible, and something we should all feel much more comfortable about learning and “owning” as something that is for us, not just the wealthy, or people who work in Wall Street.
Too many people I speak to write themselves off as terrible with money — but it’s not — as I write in the book, a personality trait or a crap tattoo you got when drunk and have to forever cover with industrial concealer. It’s a temporary state of things that you can address with a bit of perseverance.
Burying our head because finance feels overwhelming or difficult to tackle is one of the worst (and most expensive) things we can do. And yet, it’s also the most common reaction when we feel overwhelmed, bored, or disconnected.
If you had it your way, what financial topic should be taught in schools?
Everyone needs to understand the basics of compound interest, the 8th wonder of the world, according to Einstein, who famously said, “He [I’m adding she here too] who understands it, earns it … he [she] who doesn’t … pays it.”
We know we’re undergoing a huge debt crisis, and so many people I meet don’t realize just how much being in debt costs them over the long-term because interest compounds, you might start off borrowing $100, but if you are charged 20% interest, after a year your debt is $120, and you are then charged 20% on $120.
Compound interest also means the younger we start saving a bit or investing, the less we’ll have to give up later in life. That $100 saving, with 20% interest (though you won’t find that kind of return anywhere right now!) will grow because the following year you’ll earn 20% on $120, on and on over the years.
In my experience, a lot of people come to the subject of money late, at which point they feel a bit embarrassed to admit the fact they don’t really understand how the stock market works, or what a mortgage really is, or what their 401k money is doing, and end up feeling their way through big financial decisions like working out how to buy a house, sort out student loans, or put enough aside for the future. This leaves you open to losing money or coming unstuck or being ripped off.
What sparked an interest in writing a book on personal finance?
I have been a journalist for many years. I started in my early twenties writing about money for The Times of London — two weeks after Lehman Brothers collapsed, so right in the thick of the financial crisis. I wrote the book to share all that I had picked up through my own life as well as years of interviewing financial experts, all the stuff that I wish I’d known ten years ago, all the things that many of my friends still need to know!
How did you choose what topics to cover in your book?
When writing the book, I thought about addressing my younger self; what would’ve been most important or helpful for me to know? What subjects or areas do I feel are most significant for those under 40, a generation growing up through two global recessions, with more financial pressures — expensive housing, student loans, salaries affected by the financial crisis, a lack of retirement savings, as well as new opportunities and pressures brought about by technology and changing family structures.
I also cover the more emotional aspects of money — issues that, because of the way we are living, are becoming more prevalent. Money and love, for example. How do you manage money with a partner or your family? The cost of housing means many more people are having to cohabit or move in with someone else out of financial necessity. How do you make sure you and your partner are both protected in that scenario? And how do you have that super-awkward money conversation?
If there is one thing people should take away from your book, what should it be?
Being great at budgeting is not about knowing how to play the markets, but about recognizing the emotional pulls, and how our feelings about money, what our parents taught us, what our friends do, have an impact on how much we can or want to spend and save, too.
Being “good” with your money is about confidence. With a bit of knowledge, you will realize that personal finance is not as intimidating a subject as you probably think it is. And if I can get my head around it, so can you!