If you are like many people, your financial and Credit knowledge is only based on experiences you have had. Which is a powerful way to learn.

We remember experiences better, and longer, than just reading something in a book, and putting the book away. However, when it comes to personal finances, we cannot experience everything.

We can experience working, getting paid, paying bills, applying for a loan and being granted credit, but even then not for each possibility or variety of loans that are available.

So getting some insight, the lightbulb above our head moment, can go a long way to remembering a concept or idea. Planting seeds in our minds that grow, and stay with us, as opposed to just remembering something for the moment, is crucial.

As we will see, taking these little ideas and formulas that we can quickly learn in a few moments, that are easy to remember, and then expanding them or carrying them over to different situations, will be invaluable later if faced with a new or unknown situation.

We will have the tools to understand even the new and unknown situation.

In the world of lending, personal finances, borrowing Money, getting a loan, making a major purchase that requires financing, saving money, insurances, anything to do with our personal finances and credit, there are common threads and themes we can learn and follow.

An example may be loans. Loans is a very broad term and concept.

There are many different types of loans available.

Another example is insurance.

There are so many forms of insurance policies available, it is difficult to not just know them all, but how each policy operates.

However, concepts such as loans, insurance, and credit, have basics, foundations, that if you know these, you can expand on the basics and understand all types of loans, insurances, credit and credit scoring.

So give us 10 minutes of your time, and we will teach you a financial tip you can use the rest of your life!

Let’s start with some basics, our habits with money. Some may be good, and some may be bad, but whatever they are, we need to be aware of them, and if a change is required, then make it.

It is all a part of being mindful of our money and finances.

So start the timer, as each section should only take you 10 minutes to read, and then commit the Remember part to memory.

This is easier said then done, but there are a few habits we can have that are good, and some that may be bad.

Some of these money habits are common sense. (If common sense is so common, how come there is not more of it around?)

Here are three (3) things to remember and plant into your mind:

* Don’t spend more than you earn.

* Use credit wisely.

* Save, save, save.

These three points, will in part be a solid foundation for much of what you need to know for approaching good habits with money.

We will expand more on these later but for now….

Remember:

* Don’t spend more than you earn.

* Use credit wisely.

* Save, save, save.

Again, easier said than done, to know where your money is going, and the only real way to know this, is to track it.

Track your spending

You do this by putting pen/pencil to paper and write down everything pence and pound you spend.

You may be surprised at how much you spend a week on petrol, booze, lunches, takeaways, snacks, and even some impulse purchases.

Obviously some expenses that are paid via direct debits or standing orders are easy to track. We are discussing more your day-to-day spending that needs to be tracked.

Have we placed enough emphasis on the word TRACK.

By knowing where your money is going, you can make changes if need be.

Is the 10 minutes up on this one yet??

Remember:

Track your spending, know where your money is going.

Just like your doctor tells you to know your cholesterol figures, and also your BP/blood pressure, you also need to add a few other numbers to the old memory bank.

Knowing these numbers are not just important, but will help in remembering some additional ideas and concepts related to having a better and full understanding of your finances, in addition to having a better idea of if you may be approved for a loan or not.

Wouldn’t it be nice if you knew what lenders look for and at, in order to grant a loan. If you know this magical information, it gives you an insight into the “lending world”, opening the curtain to expose the man behind the Wizard.

Know these numbers:

* Your Credit Score

* The Total Amount of Debt You Have

* Your Income

* Your Expenses

If you have been tracking your spending, then you should be aware of your income and expenses. Adding up all your debts, loans, mortgage (if you have one), credit card balances, etc, all takes a few moments.

Getting your credit score is easy and free, and remember your credit score is fluid an can change, so check it with a degree of frequency.

Remember:

Know Your Numbers:

* Your Credit Score

* The Total Amount of Debt You Have

* Your Income

* Your Expenses

Now that we have some basics out of the way, and those basic tips can really be helpful later on, lets look at some concepts used in lending and for personal financial matters. Let’s call it the “Law of Opposites”, meaning that there is an inverted effect with some numbers used in the credit and lending world, and you’re knowing these is like being given the Keys to the Kingdom.

Deposits: When taking out a mortgage, car finance, or some other form of secured loan, the lender usually requires a deposit. An amount of money to be placed as a down payment or deposit, almost a show of good faith on the behalf of the borrower, in order to get the loan.

This deposit is usually a percentage of the sale price of the item being financed. That percentage can be 20%, 10%, 5%, or some other percentage of the sale price.

The opposite or inversion effect with deposits is this:

The larger the deposit, the lower the loan amount will be.

Large Deposit = Lower Loan Amount

A normal effect of a large deposit is:

The larger the deposit, the higher the chances of a loan being approved.

Large Deposit = Higher Probability of a Loan Being Approved

Credit Scores: Do you know your numbers? Then you know your credit score.

Credit scoring work like this:

Higher Credit Scores = Lower Interest rates and Higher Probability of Loan Being Approved

Low Credit Scores = Higher Interest Rates and Lower Chances of Loan Being Approved

Interest Rates: Just as with credit scores and deposits, interest rates follow the same pattern:

High Interest Rates = Low Credit Scores and Lower Deposits

Low Interest Rates = High Credit Scores and Larger Deposits

Remember:

High Credit Scores = Low Interest Rates

Low Credit Score = Higher Interest Rates

Large Deposit = Better Chance of Loan Being Approved

Low Deposit = Reduced Chance of Loan Being Approved

A bold statement, but in actuality a true one. All insurance is the same, there are the same components to each insurance policy, even though what is being insured may be different.

If you keep this thought in mind, all insurance is the same, you will never feel daunted just by the type of policy being issued.

The process of reviewing an application for insurance is called underwriting.

It is good to know this as it is a technical term used in various industries, insurance and in banking/lending.

The basic components for all insurance policies are the following:

* What is to be insured: Anything of value can be insured. This can be anything from cars, lives, health, travel, pets, credit, investments, anything of value.

* Who is applying for the policy: The person applying for the insurance policy is important, especially with car and health insurance policies. How you drive, and live, can have a bearing on the policy.

* The risk: In insurance, risk is a loss, liability, injury, something that can cause a claim to be placed on an insurance policy. For car insurance the risk is an accident.

* The premium or cost: How much is it going to cost to insure something against risk. The premium or payments.

* Exclusions: What does the insurance policy not cover, what is excluded. In a car insurance policy certain drivers may be excluded.

Once you know these fundamentals, all insurance policies seem to fall into place.

It can get complicated how some insurance policies have their premiums calculated, such as mortality and morbidity tables used for life and health insurance policies.

Also, car insurance can be complicated as the premiums can be based on driving record, type of car, value of the car, where it is to be parked, the excess amount, and many other factors.

However, to simplify matters, you only need to remember the basic components.

As to what insurance policies you need, if you drive on UK roadways and motorways, then car insurance is mandatory by law, so that answers itself.

If you buy a property and have a mortgage, a buildings policy may be required by the lender. So again, you have to have the insurance in order to get the loan.

As to what other insurances you may need, just ask yourself what do you want to protect, and what can you NOT afford to replace if lost or damaged.

Remember:

* Anything of value can be insured.

* What is to be insured.

* What is the risk.

* Underwriting is the process of reviewing an insurance application.

* What do I need insurance on, to protect what I cannot afford to lose or pay to replace?

Another big area that is important to know is prioritising your bills and debts. How can you be financially successful if you don’t know who to pay first, and what are important debts/bills to pay, and how to pay in what order.

Once again, common sense comes into play as to who or what to pay and in what order:

* Living Bills: rent/mortgage, utilities (gas, electric, water rates), food, clothing (not the latest fashions or styles), insurances and taxes (yes, including Council Tax), TV license, child maintenance payments, phones.

* Secured Loans: Loans that are secured by some form of collateral, such as a mortgage loan or car loan.

* Unsecured Debts: This can be credit cards, or personal loans, overdrafts, and debt that is not secured by property or a physical object.

This prioritising of your bills and debts, should be ingrained into your mind, and should not take a second thought when it comes to who to pay and when.

Should you ever find yourself financially struggling, it is important to know what you need to pay first.

Remember:

Prioritise your bills and debts:

* Living Bills

* Secured Accounts

* Unsecured Accounts.

When looking at tips on personal finances, some people like their money to work for them, they want to invest.

This can be traditional investing such as in stocks and shares, or investing in artwork, antiques, property, cars, or collectibles and memorabilia.

Investors want to put their money into something that will make them more money in return.

One thing as an investor you need to know about yourself before you invest any money into anything is, how much of a risk are you willing to take?

It’s like asking, how much of a dare devil are you?

The reason for this question, is that the amount of return, or money a person can make investing, can be related to the amount of risk that is taken.

Remember the “Opposite Effect” we previously discussed regarding interest rates, and credit scores; this can be applied in similar ways to investing.

Meaning this:

* The higher the risk an investment is = the more it may pay out.

* The lower the risk an investment is = the less it will pay out.

If you invest in something that is high risk, the rate of return or interest rate you may get on your investment may be 10%.

If the investment is something that has little risk, such as a savings account, the interest rate you may receive will be lower, say 2%.

There also is a correlation between a high risk investment and losing your investment, losing your money. This is why high risk investments pay off more, when and if they pay off.

As an investor you need to know your “risk aversion”.

Risk aversion can be defined as “the description of an investor who, when faced with two investments with a similar expected return, prefers the one with the lower risk.”

Also, the longer the investment in time, usually the higher the interest rate or rate of return can be.

Money in a savings account which can be accessed anytime, may only earn 2% to 3%. Longer savings investments such as ISA’s, can earn a higher interest rate due to the fact you are committing your money for a period of time, maybe two (2) years, five (5) years, or with lifetime ISA’s longer.

Remember:

Return Based on Risk: The higher the risk, the greater the return can be, in addition to the greater chances of losing one’s money.

Risk Aversion: How much of a risk as an investor are you willing to take with your money.

The longer the time period for the investment, the higher the rate of return can be.

The big question most people have is, how much money should I be saving?

How long is a piece of string??

The real answer is, as much as you can.

There can be savings for quarterly or annual bills we may face, such as holidays. Savings for emergencies that may come up, loss of income, health issues, etc. And long-term savings for retirement, or to make a large purchase, such as a property or car.

Again to answer the question how much to save, as much as you can, save anything. As to how, there are may ways, but the best way is to pay yourself first.

Set-up an automatic deduction from your wages that goes to a separate savings account. That way you do not see or miss the money. Even if it is just £25 a week, or even £25 a fortnight, it is saving something.

Another fun method to save money is the “rounding-up” method.

The rounding-up method is easy and works like this:

You go out for lunch and the meal costs £3.79, and you pay by debit card. If you are tracking your spending as we discussed, you would just enter this as £4, rounding the amount up.

Then let’s say later on your way home from work, you stop to do some food shopping, and the amount you spend is £18.09, you pay by debit card, and round this up to £19.

Just between these two transactions you have saved £1.12. Which may not seem like a lot, but over the course of weeks and months, it can add-up significantly.

Remember:

Save Money

Save as Much as You Can

Save

Save

Save

Each of these tips/insights, should have only taken you a few minutes to read and commit to memory.

Yet, when you later may need to apply for a loan, open a savings account, make a large purchase, or struggle with what bills to pay, you are armed with the basic knowledge to make better decisions, and also possibly save money.

In addition, these concepts and basics have remained the same for years, and are not likely to change anytime in the near future.

10 minutes of study for a lifetime of knowledge, sounds like a good investment to me!