Maths Skills For Life - 15 Personal Finance Skills That Everybody Needs To Know
Personal Finance is a major area where everyone continues to need their maths skills long after they have left the classroom. Good financial skills will mean your pupils have much better choices in life – they will be able to maximise what they earn, avoid problem debt and feel more confident and upbeat about their finances. Personal Finance can affect every area of our lives, summed up in this quote from Martin Lewis:
Money isn't just a financial issue. Problems can infect every area of your life – your happiness, mental health, work, relationships and more.
- Martin Lewis, MSE founder
Here is a quick reminder of some of the financial skills which your pupils will need in the future, as well as links to useful resources at the end of this article:
1. How To Budget
Budgeting is the cornerstone of personal finance. If you are spending more than you earn, or you have insufficient savings then things are going in the wrong direction. Budgeting helps people achieve their goals, avoid debt and make the most of what they have.
2. Interest (and Savings)
Sometimes we will be in the lucky position of having savings or investments. Understanding compound interest and being able to interpret interest rates will help you pick the best option for your money. If you are saving for a particular end goal such as a new kitchen, you will be able to work out how long that should take.
3. Self-Assessment Tax Return
For anyone who becomes self-employed, filling in a Self-Assessment Tax Return is essential. From freelance graphic designers, to self-employed plumbers – self assessment tax returns are completed by around one third of tax payers in the UK.
4. Inflation
Inflation is often in the headlines, but it affects us all as we feel our spending power reduce. Understanding what inflation actually means can help us make sense of the news and the impact on our pockets.
5. Mortgages
Around 14 million adults in the UK have a mortgage, and choosing the right mortgage product is an important decision. For many people, even getting to the point of being able to take out a mortgage has required lots of careful saving and budgeting in order to be able to afford the deposit.
6. Credit Score
Understanding your credit score is vital to managing your finances. What types of activity will affect your credit score? What are the potential consequences of having a poor credit score?
7. Insurance
There are lots of types of insurance which we need to have, and a few others which are optional, such as insuring your tickets when you are going to a concert. What is the financial impact of not taking out the insurance? How can you find the best deal and have you read all the small print about what is and isn’t included.
8. Types of Debt
Not all types of debt are equal. An example of a good debt could be a mortgage where you can afford the repayments, whereas an example of a bad debt could be a Pay Day Loan with a high rate of interest. Understanding different types of debt can help people avoid getting trapped by problem debts.
9. Student Loans
There is a lot of confusion about student loans and what they really mean for personal finances. A proper understanding of student loans enables young people to make good decisions.
10. Utility Bills
There is so much maths involved in utility bills. Firstly, you need to try and find the supplier which you think is the best value for money. Then you need to check that they are billing you correctly. Being comfortable with calculating your utility bills can save hundreds of pounds per year.
11. Tax and National Insurance
Understanding Income Tax and National Insurance should be something we all know how to do. It has a big effect on our take home pay, and will help us understand the impact of taking a new job with a higher salary. It can also help us identify mistakes, and make sure we are being paid correctly.
12. Checking a Payslip
Even when you understand Tax and National Insurance, Payslips can still be seriously confusing – what do all those words actually mean and where did those numbers come from? Being able to check a payslip is an important life skill which everyone should have.
13. Getting Good Deals
It seems like absolutely nothing is simple when it comes to shopping around for the best deals. Train tickets, mobile phone contracts, flight deals – it is a minefield. Strong maths skills can help cut through the confusion and help secure the best deals.
14. Big Projects
Lots of people have to manage a big project at some point in their life. It could be renovating a kitchen, building an extension or planning three months travelling around South America. From budgeting to timetabling, maths helps all of these big projects happen much more smoothly.
15. Pensions
What will I need to live on in retirement? How much should I save now? Which pension product should I choose? Pensions might seem like the most confusing area of personal finance but they are also one of the most important.
Further Information
Find a list of free educational resources from the Money Saving Expert website, as well as links to additional resources from banks and charities. This link also contains signposts to sources of support for those who are struggling with their money.
Find further advice on the government funded Money Helper Website.
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