Budgeting for Beginners

Young brethren these days, whatever the state of their general education, would have to be wilfully deaf to be untrained in personal finance.

As I've said before, being among the brethren requires serious financial commitment. Looking up at the mountain of money needed to set up a home from the poverty of school years does focus the mind, and there is plenty of help for those wishing to learn how to accumulate it - not to mention prodding for those who appear less keen. If you also remember that any involvement with the opposite sex is forbidden until that home is set up, you can see that many would be eager to acquire the funds just as soon as possible.

So, as you'd expect, there is an entire network devoted to helping. Young men (and to a lesser extent, young women) learn very soon about the benefits of early saving as opposed to postponed saving, and frivolous spending is discouraged. Most would be familiar with the graphs that show how mortgage repayments and terms are affected by the size of the down payment.

Employment, too, is often structured to encourage saving. Those working for family will probably be massively overpaid from day one, but even then part of the wage may be diverted to investments for them. This is not uncommon for non-family employees, either. The most common method is to leave the money within the company, earning interest at commercial rates. Obviously this applies to businesses that are well-established. An alternative route for young men with drive is to join a newer business at a lower wage and hope to gain faster as the business grows.

It used to be, until quite recently, that it was more or less obligatory to save half the value of a house before buying, so that it wasn't remotely likely that a crash could result in negative equity. That has become a very tall order in many parts of the world, so the exceptions that were often made for people with special needs are now very widespread. Mortgages for a large percentage of the house's value are still strongly discouraged, but there are brethren who will make up the shortfall - normally still at commercial rates, but without the risk of the loan being reclaimed in hard times.

Unless, of course, those hard times are moral ones. The leverage that brethren-owned debts can give is so obvious it doesn't need spelling out.

After that, the objective is to pay off the bank just as fast as humanly possible. That has always been the case, but it is now being pushed very hard indeed. I know of several cases where young couples have been instructed to pay off thirty-year loans in five years, or even three.

I'm not sure on the detail of that. There are a few budgeting schemes being circulated but, not being in the position myself, I haven't seen them. Employers are encouraged to pay their young employees by need rather than merit, on the grounds that performance will follow reward. Then the employees should be emptying every last corner of their wage packet into the mortgage. There are still the costs of brethren living, the entertainment, the collections, but nothing over.

Now I'm paying my own way, I think it would have been nice to have a bit more idea how it was done. Not only was I a little too old to get the training, I wasn't inclined to take much notice. It takes maturity to recognise good ideas coming from a source you've dismissed on other grounds, and I have lacked that. So my financial skills are limited.

So far, my method consists of an Excel workbook with sheets for capital expenses, recurring expenses and general expenses. I'll keep an eye on that, and I suspect just being aware of where the money goes is a good start. Then the bank is advising me to begin a pension scheme ...

Argh. Money.