When you know how to do something, it can feel very easy.
However encountering others who cannot do it reminds you that everything has to be learned, either by study, or by hard experience.
I grew up in a very poor family. My parents taught me the importance of not wasting money, avoiding paying interest whenever possible, etc. Some people never learn even those things.
My formal education (mathematics degree, chartered accountant) gave me an excellent knowledge of compound interest, how to read accounts, economics, financial markets, and related subjects.
On top of that, I have been an investor since my early 20's, and have been reading about investing theory and practice ever since. The combined effect of this background is that I feel very confident with my understanding of personal finance.
What always suprises me is how many of those people who I would expect to be financially literate are not.
I will share just two examples, both involving chartered accountants at my old firm of Price Waterhouse / PwC:
As part of my voluntary role with the UK Shareholders' Association policy team, I recently wrote down my thoughts on those basics of personal finance that everyone in the UK needs to know. I then converted that text into an article for "The Private Investor" which is UKSA's house magazine.
You can read that article below. "101" is the standard US designation for a beginner's course in a subject.
It obviously comes with the disclaimer that is in the footer of every page of this website.
For those unfamiliar with American English, part “101” of any college course aims to cover the absolute basics.
UKSA members of course don’t need to learn personal finance 101; all of us should already know it. However, many have children, and most are also likely to have friends who occasionally ask for financial advice.
At that point, as well as the common-sense risk of giving advice that might turn out badly and lose a friend, the law severely inhibits what you can say to people without falling foul of financial services regulations.
With my own children, I operate on the basis that I can say what I want to them. If the law wants to get involved, I will take my chance to become a regulatory martyr!
However, with anyone outside the family I just have to say that I cannot help them, beyond suggesting some good quality reading material.
UKSA emphasised how current rules prevent the sharing of basic common-sense knowledge in its recent response to the FCA consultation on the Consumer Investments Market.
As part of my collaboration on that response, I wrote down what I regard as the absolute basics of personal finance, which we should be able to share with anyone. Unfortunately, what the law stops us doing is naming any names of suitable products, even when the choices are obvious.
Below is what I wrote, which became the key part of Appendix 2 of the UKSA submission, since readers may wish to share this with family and friends who approach them.
The following points are numbered because they follow a strict order of priority:
Unless and until you attain sufficient confidence to make judgements about company financial reports, business models and competitive environments, do not venture into individual company shares.
Mohammed Amin MBE FRSA MA FCA AMCT CTA(Fellow)
Editor's note: although Amin is a member of UKSA’s Policy Team, he is writing in a personal capacity.