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As part of our FT Financial Literacy & Inclusion Campaign, some of our experts explain how they learnt the hard way . . .
© FT montage; Dreamstime | From bad interest rates on cards and hire purchase agreements, to living well without checking the cost, our writers can all point to mistakes they have made
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Madeleine Speed
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'What have you got against free money?'
Pilita Clark, business columnist
I made one of my first and worst financial blunders when I landed a job on a big city newspaper in my early twenties.
In the excitement of being hired, it never occurred to me that I should join the company pension plan.
I still remember a wide-eyed colleague looking at me in shock when he discovered this oversight. "What have you got against free money?" he hooted.
He was right. The scheme was astonishingly generous by today's standards and better than the industry-wide retirement plan I joined a few years later.
My newspaper matched employee contributions and, though I was initially paid peanuts, my salary rose over the years to the point that I would have eventually amassed a helpful sum of money.
I know this because my husband, who is my age and also a journalist, brags constantly about how clever he was to join his newspaper's scheme as quickly as he did.
Today, I might have been protected by measures such as a requirement for employers to automatically enrol staff into a pension scheme. But these rules are not universal. No matter how old you are, it always pays to be financially aware. Literally.
Take home message: read the small print
Brooke Masters, chief business commentator
Back when I was a regulation reporter, I found myself covering a massive scandal in the US mutual fund industry. Unscrupulous investment managers had cut secret deals that allowed hedge funds to buy and rapidly sell shares in their funds. This had the effect of siphoning away returns from buy and hold investors.
As someone who invests for the long haul, I was outraged by the revelations. I was even more outraged when it turned out that I owned shares in several funds that had been involved. I eventually received small compensation cheques from some of the settlements I had covered.
It was bad enough that I was among the millions of victims. Even worse was my discovery that the insurance group that recommended these funds also faced sanctions from US watchdogs for failing to inform its customers that it steered their money into higher-fee funds that also paid higher commissions. The take-home message: read the small print and ask your broker or adviser if they have a personal financial interest in their recommendations. You are the only one who really has your best interests at heart.
How I crashed my finances for love
Isabel Berwick, work and careers editor
It took me a couple of years and a bank loan at punitive rates (in the early 90s) to extricate myself from the hundreds of pounds of overdraft and credit card debts that I ran up during a brief fling with a very nice man.
I was a newly-minted journalist on a medical title, earning £13,000, not at all sure I'd been right to leave academia. I hedged my career bets by studying for a masters degree and spent every weekend in libraries. The social excitement level for someone in their early 20s was — low.
The FT Financial Literacy and Inclusion Campaign
Why financial literacy is a passport to financial freedom
How the charitable foundation aims to provide financial knowledge to those who need it most
The lasting legacy of financial literacy
Courtney Love and other reader responses
Video: How to achieve financial literacy
When a long-term relationship ended in infidelity (him) and acrimony (me), this Very Nice Man swept me off round London. We took black cabs everywhere. We ate in Belgo, The Eagle, Quaglino's and Dell'Ugo. Once I met him in a wine bar and he was working on a laptop. It was such an outlandish sight that the entire bar was watching. I didn't think it would catch on.
He was in a well-paid and glamorous TV job. I did not face up to the fact that I was ruining my finances. I was having too much fun.
After the relationship ended (amicably), the austere packed-lunch-filled aftermath sobered me up. My outlook matured. I became a personal finance journalist and did that for many years, learning a huge amount along the way.
Still, do I look back and regret the events of that crazy summer? Not for a single minute.
Strawberry yields forever
Jonathan Guthrie, head of Lex
My biggest financial mistake — measured by the scale of my naivete rather than its cost — was to go strawberry picking with a friend when I was a teenager. It taught me two painful lessons. First, always target a percentage before pursuing a venture. Second, watch out for rip-offs.
Our moneymaking plan was to go fruit-picking as day labourers in the Cheshire countryside. We had no idea what return we might expect and no experience of picking strawberries.
A family from the traveller community harvesting beside us knew exactly what they were doing. They worked fast and the father stood over the scales at the end of the day to check their pay was fair. But the gimlet-eyed farm overseer could see we were rookies and insisted half our haul was substandard. He dismissed us with loose change and, I assume, pocketed the difference.
Our profit, after deducting train and bus fares was tuppence. We tossed for possession on the way home. I fumbled the catch and the coin went down a grating.
The experience taught me to be hard-nosed in assessing transactions. The world is divided into people who can calculate percentages and those who cannot. The fewer of us that fall into the latter category, the better.
Why am I still paying for this coffee table?
Claer Barrett, consumer editor
In 2003, soon after moving into the first flat I bought, I split up with my boyfriend. Buying the flat on my own was a factor in our break up — but buying it jointly with him would have been a monumental financial mistake! Nevertheless, he took the coffee table with him, so I headed to Ikea.
The new table I selected cost about £250, had inbuilt magazine storage and very sturdy metal legs. In my singleton partying days, when I came home from the pub, I'd lie on the floor holding on to the legs in a futile attempt to stop the room from spinning. However, I also took my eye off the ball when it came to the repayments.
At the Ikea checkout, I'd been persuaded to take out a store card to pay for the table on credit (I also bought a selection of house plants, which didn't survive beyond the first bill). The incentive was 10 per cent off my first purchase. That was an eye-catching offer; the less noticeable small print said the rate of interest on the store card was over 20 per cent, with a minimum monthly repayment of around £7 a month.
Claer Barrett with the highly expensive Ikea coffee table
Against the backdrop of a hectic social life, this felt like a bargain — until one day, after a few years had passed, I thought "why on earth am I still paying for this table"? When I opened the online statements, I could see that the interest I'd been charged over the years had not only wiped out the introductory discount, but added around £100 to the overall cost.
I was really angry with myself for sleepwalking into this debt trap, but learned a valuable lesson — always pay off credit cards at the end of the month.
Regulators have since clamped down on these lingering minimum payments, requiring card companies to engage with borrowers if this becomes a pattern.
If aged 21 you borrowed £3,000 on a credit card and only made the minimum payment, you'd be nearly 50 years old by the time you cleared the debt — and would have paid more than you borrowed in interest charges. That's assuming a typical credit card APR (annual percentage rate) of 20 per cent — although some cards for people with a poor credit history have APRs of nearly 50 per cent. The speed with which small debts can balloon is a powerful but terrifying example of compound interest working against you.
Credit cards can be a useful financial tool, but debts run up in your hedonistic 20s can linger on into your 30s. Card companies use all kinds of offers including points, zero interest deals and other incentives to get us to spend money on things we may not even need, hoping to milk profits from us in the future.
And the coffee table? Having paid over the odds for it, I'm glad to say that it still has pride of place in my living room after 18 years of service — and the legs are still very sturdy.
The fatal lure of a massive black telly
Matthew Vincent, editor, FT Project Publishing
Two heads are better than one, we are told. Except, it seems, when they belong to a couple of junior financial journalists in a flat share. I was half of this jejune duo, and jointly to blame for a double blunder.
Desperate to watch England's exit on penalties from that year's football tournament on a big screen — but lacking cash — we visited the local TV rental shop (that's how long ago it was). Two signatures later, we had a massive black plastic telly and, unbeknown to us, a consumer credit agreement with extortionate terms.
Three years later, we'd probably paid enough to have bought the TV several times over. Thankfully, we now earned enough to buy flats of our own (that's how long ago it was). So the equipment was returned to the rental shop, and our stupidity consigned to history. Or so we thought.
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I then received a letter from my mortgage lender saying my credit record had been impaired by late payments on a rental agreement. One or both of us had been overdrawn when the TV direct debits were meant to leave our accounts. I needed a letter from my flatmate exonerating me. He graciously wrote one. And he proved far more financially savvy than me: he ultimately left journalism for a much better-paid job in the City.
'If you ever have to pay someone money' he said . . .
Sarah O'Connor, employment columnist
The only piece of financial advice I remember receiving at school came from our technology teacher on our very last day. Maybe he had a twinge of anxiety at the thought that the 16-year-olds in front of him were about to enter the real world and the only thing he'd taught us was how to use a soldering iron.
Listen up everyone, he said. If you ever have to pay someone money, but you don't have the money, this is what you do: write out the cheque but put the wrong date on it. They probably won't notice straight away and it'll buy you a bit of time.
Sensible advice? Maybe not, but it did stick with me — unlike how to use a soldering iron.
The crippling cost of having children
Lucy Kellaway, FT writer
The worst financial thing I've ever done? So easy — that was having four children.
It was a financial catastrophe, but there's a message in that, which is although finances are very, very important, they're not everything in life. So I still don't regret it.
Losing money was always on the cards
Paul Lewis, presenter BBC Money Box
I was 15 and I went to London by myself — an hour's train journey from Maidstone — and I had a £5 note, which was a lot of money back then. I was walking down Oxford Street and there were these men with crates and playing cards, doing "Find the lady". I thought, that's easy, I can do that. So I put my £5 down — and of course, I lost it. That was a big disaster for me, but I have never gambled since and, in fact, I have quite a passion against it and the way that it's grown in our society. It was a good lesson learned, though at the time, I didn't realise that.
My four-wheeled foibles
Ken Okoroafor, FT Money columnist and blogger
The worst financial mistake I ever made was buying a really expensive car — a Mercedes coupé C-200 — in order to attract a life partner. It was a disaster; I had break-up after break-up and, financially, it was the worst thing I ever did. Once I sold that car and bought a much cheaper one, I met my incredible wife Mary, and we've been together now for 10 years.
What was your biggest financial blunder? And what did it teach you? Please comment below.
How should we teach children about financial literacy? Take part in a live Q&A on the FT.com homepage on Wednesday September 22, at 12 noon with Claer Barrett, the FT's consumer editor, and Aimée Allam, executive director of the FT's Financial Literacy and Inclusion Campaign.
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