My Financial Origin Story – Getting Minted

Belatedly taking up on Monevator’s idea and Sovereign Quest’s challenge here is my story.

I had a comfortable upbringing. We were a middle-class family but not one for showing off. We holidayed exclusively in the UK and mostly near Blackpool. My parents were careful with money even though they weren’t short of it, as I later realised. To add to my pocket money, I did various paper rounds from the age of 14 until I was 18, so that I had more money to spend. I learned to manage the little money I had to fund my hobbies and interests. I sometimes borrowed from my dad to order or buy something I was saving up for. I always paid him back. My parents would never have considered private schools and I had little awareness of them. The eleven plus for grammar school selection was abolished locally just before I was eleven. I attended local comprehensive schools and was the first in my family to go to university.

I was an untypical student. My first term’s student grant felt like a large amount but more than half was taken by student hall accommodation and meal charges. I started a cash book to keep track of my money and my spending. I’ve maintained such records ever since then. I finished the first term in the black having not spent all my grant! I was careful but not completely deprived. In my second year I moved into a bedsit and aimed to live on a budget of £40 per week that had to cover rent, travel fares, groceries and any drinks or small luxuries. I was back in a student hall for my third year. I never lived in a student house share, so I missed that experience, although I did visit friends in one not unlike this one:

I stayed in the black and never had a bank overdraft during the three years. I had a credit card but only used it once, to buy a 12” black and white TV, and immediately paid the bill in full. I’ve always paid in full since then and never taken on any consumer debt. By the time I was 21 I had five bank accounts which amused my student friends. I had a current account and a deposit account which held my student grant. I also had one building society monthly savings account holding money previously saved monthly by my parents for my benefit, and another account holding money given to me from my deceased grandmother’s estate. I opened another account with National Savings because it paid 14% interest! This was the early 1980’s. I was careful with my money but I was still able to have drinks with friends and a meal out for my 21st birthday. I later on worked for someone who said they wished that they had gone to university so they could have learned how to manage on a little money. I was able to do that.

I struggled to get my first job. I lived at home with my parents for a year whilst applying for jobs and then, after getting one, waiting to start. I didn’t spend much until I had a job to go to. Then I felt able to indulge a little and buy some hi-fi equipment. I had to relocate for the job and the employer found me some temporary accommodation in a hostel. This was quite basic, but cheap, and compared poorly to my previous student accommodation. I shared a room with a shift worker and got to listen to his hi-fi. I only stayed there for four months.

I bought my first home as soon as possible. After only six weeks in my new job, I had decided to buy a new build, but not yet built, studio flat. I put down £300 as a stakeholder deposit. In those pre-internet days’ I was a keen reader of the newspapers and magazines that informed and encouraged home buying. I was rather decisive then in wanting to buy, mostly because I could do it. I later realised how reckless that was and why my parents were so concerned. They nevertheless helped me out with some money for my deposit. That was the only time I ever really needed any money that was given to me. The amount was equivalent to about six months of my take home pay back then. It meant that my mortgage was below 85% of value so I didn’t have to pay mortgage indemnity insurance that would only benefit the lender. Before I exchanged contracts the mortgage interest rate increased from 12% to 14%. The house builder gave buyers a little discount against the price to encourage buyers not to drop out at that stage. I moved in to the partly fitted out flat and spent another £500 to get the extra basic furnishings and appliances I needed. I began to build self-assembly furniture. I finally got to listen to my own hi-fi in my own flat. I was 22 years of age. The mortgage was about 40% of my take home pay so money was tight for a couple of years until my pay rose. That commitment to paying the mortgage served to make me frugal in my other spending.

I worked hard and progressed my career, but never let it dominate me. I learned the duties of my first job but I wished to progress further and realised that I would need to study in my own time to enable that. Later on, I needed to move jobs a couple of times in order to get on. I did, however, maintain a life outside of work, and was probably regarded as a bit of an outsider at work. I was always interested in managing my own personal financial situation and I didn’t let my work distract me from that. Some people who are successful in work neglect these things.

I earned an above average salary. When I started my first job, I earned close to the national average wage. By the end of my twenties, I was earning double the national average wage. After three years I had moved to a bigger two-bedroom flat with a bigger mortgage but the mortgage took a decreasing share of my earnings.

I spent less than I earned. Being a frugal careful spender as a student and in my first five years in work gave me a good grounding. As I earned more money, I did spend more, but I never really ramped up my spending. I may have been a “yuppie” (Young Urban Professional) by my income demographic but not by my consumer expenditure. I was certainly no splash the cash “loadsamoney” and never worked as a plasterer:

Given my relatively modest spending my higher earnings meant that I was able to save increasing amounts of my take home pay. Maybe I should have spent more, and maybe I should spend more now, but these are hard habits to break.

I started to invest as soon as I could. Within two years of starting my first job and about eighteen months after buying my first flat I started to invest in equities. My first move was to start a £30 per month savings plan with a unit trust company. I began also to invest lump sums of a few hundred pounds to other unit trusts every few months.

I learned to invest. I never used an adviser but I was a keen reader of the personal finance section of my newspaper and of magazines such as What Investment. I learned from my own reading and my own experiences. I made my first mistakes, when I had not much money invested. I invested in the latest hot new fund that went cold shortly after I bought it. I experienced the 1987 crash but without too much skin in the game. I stayed invested.

Conclusions. I see my financial origins as being rooted in my family upbringing in the 1970’s and in my own experiences as a student in the early 1980’s. I began to build on those as a young worker, early home buyer and first-time investor in the mid 1980’s. Twenty-five years later a work colleague said to me “You must be minted.”