Stop lining the banker’s pockets because of your lack of knowledge
Making sure that you know what you’re getting into and stay wise to any hidden potholes makes a big difference to your finances. Not knowing what your options really are can lead to you not getting the maximum possible benefit from any investments. Not knowing the common hidden fees and downsides tucked away in the fine print, as we’ve all probably found at some point, leads to nasty shocks down the line. Wising up to the details of your finances gives you the certainty that you’re making the most informed decision you can.
A problem at all scales
Pretty much everyone knows that, in the end, bankers are out to make money. Ideally, they manage this without you getting burnt by unexpected fees, questionable investments, and the like. But it often feels like the opposite is happening, and the banker is cashing in while your finances seem to be in a tailspin.
Even when things aren’t that bad and it looks like you’re both benefiting, there’s a difference between ‘not going badly’ and ‘best case scenario’. Understanding your finances and how the financial system works can help you to direct your finances to maximise the benefit to you, rather than to a third party.
Sometimes, this is even the case with super simple stuff. When a trust matures – for example, a trust fund set up for a young relative to be accessed once they hit twenty-one – the bank will automatically convert it into a new account unless directed otherwise in time.
In itself this isn’t a bad thing. It’s just that the type of account is going to be the one with the least return for you. And it’s easy to just let it drift into that state of being. Sure, it’s a helpful default that means if you’re not sure where to invest or move the money immediately, it starts racking up interest. Just at a negligible rate.
Knowledge is power
Knowing what the options are, and how the default compares, can make a pretty big difference even at this level to what happens to your finances. Unfortunately, the world of finance is up there with legal jargon for being inscrutable.
It’s also easy to get sucked into decisions thanks to a particularly magnetic promise – particularly good interest rates, say – and not pick up on the conveniently less advertised downsides. So-called ‘hidden’ fees, such as charges to use your card abroad, aren’t exactly something most banks want to splash all over their advertising material! Even just knowing exactly what these fees are can allow you to plan how to minimise how many of them you pay…so long as you can figure out exactly what fees you’ll be charged, when, and why.
Luckily, there are also people who make it their business to breakdown the jargon and go past the flashy advertisements. Not just in the form of advisors for hire, either. The internet is full of people discussing the financial world and how to navigate it, so long as you’re prepared to set aside a little time to browse.