RULE 30

Start saving young (or teach your kids this one if it’s too late for you)

OK, it might be too late for you to start saving young. We can’t go back. But you can certainly teach your kids the importance of learning this trick. And I’m not suggesting we scrimp and save to be able to save. Saving should be something we naturally do. I guess it’s a trick you learn quickly if you are self-employed – or not, if you go bust. Every time you earn money you put some aside for VAT and tax. Failure to do so means scrabbling around when the return is due and you have to find it. If you put aside more than you need, the leftovers become the savings. Obviously you only fail to do this once or twice before it becomes a really easy thing to remember to do.

I find that it is easier to have a ‘figure’ so you don’t have to think too much. My own figure is 50 per cent. Anything I earn, I put half straight into a savings account. I don’t have to think about this. I know that some is for tax and some is for VAT and the rest is for savings. Every now and again I transfer the balance of what’s left to a second savings account – a sort of super savings account. From the super savings account I can transfer money to a pension fund, ISA (Individual Savings Account) or whatever.

This, for me, is an easy way to save. I don’t have to think too much about it. It is a method I pass on to my children – spend half your pocket money and save half. I hope they’ll find this an easy method to pick up, a sort of savings muscle memory, so that they will have a quid or two when they need it at university or whatever.

I really wish I had (a) started saving young and (b) been taught to do so. Lots of really prosperous people have said that they had wealth management drummed into them from a very early age. It seems to be an essential part of prosperity gaining.

I am fascinated to watch my own children learning about money. There does seem to be a genetic predisposition for spending or saving. We treat all of them identically when it comes to money but one child finds it easy to save; another is a fanatic spender and couldn’t save anything to save himself; and one is oblivious to money either way.

I’m a great believer in making changes to correct basic flaws in one’s upbringing. It’s no good sitting around blaming others, you have to change it. I have to take responsibility and train myself. Obviously this doesn’t apply to being tidy.