Money is an important topic for everyone. If you are young, and just starting out in the world of work, you may not have much of it yet! But it's never too early to learn some basics

Whether you are thinking about banking, insurance or investing, we can provide some help to get you started. We have collected our top 10 finance hints - follow these, and you will be well on your way to making the best use of your money.

Consumer Basics - Starting Out

1 - Understanding the basics
Financial services often seem really complicated, but it should not be hard for you to understand the basics for all financial services that you may need now or in the future. If you don’t make some effort to learn, you could get a nasty surprise if something goes wrong.

Before you sign on the dotted line, make sure you understand the basics of:

• What you have promised to do (e.g. make regular, such as annual, payments).

• What the company has promised to do (e.g. provide a loan, or cover a loss).

• Whether there are any exceptions or qualifications to these promises (e.g. an insurer may not have to pay your car insurance claim if you had been drinking when the accident occurred).
 
• What you should do if something goes wrong.

Do not be afraid or embarrassed to ask questions. Sometimes it can be awkward, but a good financial intermediary or a bank representative should give you enough time and information so that you can understand the product. You should also ask to take the documents away, so that you have time to read them and get advice.

Do not be pressured into signing something that you do not understand.

You could regret it later.

2. Hold onto your paperwork

Anything to do with money often involves lots of paperwork - account statements, contracts, policy documents, terms and conditions and more.

If you are tempted to throw all this paperwork in the wastepaper basket - stop! Even if you do not read it all straight away, get into the habit of keeping the important paperwork in a special file that is easily accessible. It will come in handy if you have a question or problem about your financial affairs.

You should also get into the habit of keeping notes of any important telephone calls you have with your finance institution. Again, they might help if you have a complaint.

Your notes do not need to be fancy, but it is important to record basic information such as the name of the person you spoke to, the date and time, and an outline of what was said. Keep this with all your other paperwork.

Banking and managing your money

3. Reduce your costs
Some form of savings or current account is almost a necessity these days. But do not be complacent about your account - there are ways that you can reduce costs of keeping a bank account. For example, if you are a student or a recent graduate, you may be able to get a special package from your bank.

But what if you are not eligible for such a package? You can still reduce your costs by changing how you bank. For example, it is often cheaper to use PC or telephone banking than to visit a branch. But first, you will need to understand how and when fees are charged on your account. Ask your institution to tell you about the main fees and charges. You can use this information to help you develop cheaper banking habits.

4. Minimise the risk of unauthorised transactions - keep your PIN secret
Many complaints about unauthorised transactions are made each year. The best way to protect yourself from someone accessing the money in your account is to keep your PIN and/or password secret! Do not tell anyone your PIN or password - this includes your friends and family. Also, do not keep a copy of your PIN or password near your card, or on your computer (unless it is password protected).

Many institutions will let you choose your own PIN or password, and this can help you remember it. But, be careful with what you choose – do not make it so easy to remember that it will also be easy for a thief to guess.

Besides, be careful where you keep your cards to reduce the risk of them being stolen.

5. Be very careful with standing orders
Standing orders can be a great way of making sure that the necessities of life - like your bills - are paid on time. But make sure you know how to cancel a standing order if you need to.

To cancel a standing order, you should tell both your bank and the company to whom you are making the payment. Writing a short letter is often best. Keep a copy of the letter, and if problems arise, contact your bank and/or the company straight away.

Also, make sure you have enough money in your account to cover a direct debit. If there is not enough, you might have to pay an expensive overdraft fee.

Insurance - protecting what you've got

6. Shop around for insurance like you shop around for clothing or plan a holiday
When you are planning to buy a car, planning a holiday, or taking out a loan, insurance is probably the last thing you want to think about. But you may need it for your own protection and those of your assets. So it is important to spend a little bit of time shopping around for insurance which best suits your needs. Having a good insurance policy can make all the difference to your pocket - both now and if the worst happens and you need to make a claim.

So don't just accept the first insurance policy that is offered to you – regardless of who offers. Shop around. Even if you make just three or four quick telephone calls to different companies, you'll find that terms and conditions, including the price might vary between one company and another. The Internet can make this easier

And before you sign a policy, make sure you understand what the insurer will and will not cover. For example, some travel insurance policies might not cover you if you are injured when skiing or doing other dangerous sport. If you don't choose a policy with the right coverage for you and your circumstances, you could end up with unpleasant surprises in case of a claim.

Be completely honest
When you apply for insurance, you'll have to provide a lot of details to the insurance company.

For example, if you are getting car insurance, you may be asked about your driving record, whether the car has been modified, and other things. Your answers will help the insurance company assess your risk, and therefore how much your policy will cost.

Don’t be tempted to play around with the facts! If you do so and the worse happens, and you need to make a claim on your policy - your insurer may have grounds for refusing to pay your claim.

Remember – you must inform the insurance company about any material changes in your circumstances, in particular, each time you renew your policy. The type of questions that were asked in the original policy application will be a good guide to the information you might need to disclose when you renew. And if you have any doubts – ask your insurer! Keep a written record of what they told you and ask for copies of any documents you are asked to sign by your insurer.

Keep this in mind! The more claims there are, and the higher the amount of these claims, the more likely it is for insurers to increase the premium for insurance covers. Always act prudently – as if you are not insured!

8. Think about insurance before you choose your car
If you are buying a car, it’s good to think about insurance before you choose the type of car that you want.

You might think that, if two cars cost the same amount to buy, they would cost about the same amount to insure. But the cost of insurance often depends as much on the type of car, as it does on the cost of the car, age, driving experience, claims history etc.

For example, a sporty car might look great, and impress your friends, but it might cost you much more to insure than a basic car. And if your dream car has got modifications, like a bigger engine, insurance might cost you more again. It's better to be prepared for these extra costs than to get an unpleasant surprise after you have bought the car.

Also, remember that if you get a loan, the bank can require you to take out comprehensive insurance to cover the car. You may have to take out other types of insurance – such as a life policy. But purchasing such other types of insurance may not be compulsory – double check this with your bank before buying such policies. Although the bank may offer its own policies, you are not obliged to purchase any of them. Shop around for the best deal.

Savings and investing - achieving your goals

9. Take things slowly
If you're like most people, it’s easier to spend your money than to save it. But saving and investing are often the only way to achieve your big goals - buying a new stereo system, buying a car, going overseas.

Often it's easiest to save small amounts frequently - maybe by directly transferring part of your salary each fortnight to a savings account.

If you're thinking about investments - managed funds, shares, and others - you need to think about what level of risk you are prepared to take. The higher the return, the higher the risk that you will lose some or even all your money. Keep in mind that the value of your investment can change over time and that you may not get back the original amount that your have invested.

There are many financial products on the market. If you purchase an investment, think of your future as well as your present. Talk to a licensed financial intermediary – he would be pleased to explain what is best for you and your needs, in terms of your circumstances.

10. Watch out for scams
If you have been contacted by someone asking for your help in transferring money out of the country, then you are one of thousands of people all over the world who have been targeted by what is sometimes called the “Advance Fee Fraud”. Sometimes they are also called “Nigerian Letter Scams” because they originated from that country in Africa – although today they are sprouting from everywhere!

These letters promise you to become a millionaire within a very short time in exchange for some assistance. These financial scams appear ruthless and simple. They appeal to our greed and our desire to avoid the work involved in solid long-term saving. Do not take heed of what they are promising you. These scams take all sort of forms – but they are all the same –– SCAMS.

Remember that there are no easy ways to “get rich quick”. If it sounds too good to be true, it probably is not true! Your alarm bells should ring loud and clear when you hear phrases like “high returns with low risk” and “get rich quick”. “No risk” often means the biggest risk of all.

It is virtually impossible to become rich overnight. If you want to get rich quick, you have to work hard from it. These scams will not make your dream of becoming a millionaire overnight come true. Indeed, if you fall into these fraudsters trap, you will realise that you will no longer dream of becoming a millionaire, but of your expensive mistake.

Never give your bank account number, credit card number or other personal details to unauthorised people.

If in doubt, check it out! Seek professional advice from a licensed financial intermediary before you make a decision – not after. They are better placed to guide you and inform you of these scams. Look at the website of the Malta Financial Services Authority (www.mfsa.com.mt) for a list of such financial intermediaries.