British businesswoman and crafting queen Sara Davies said one of the most valuable lessons her parents taught her growing up was the importance of budgeting and understanding money.
“As a parent, you just want to give your kids everything, but I realised the thing that my parents gave me that was way more valuable than anything they ever bought me, was that understanding of money,” said Davies, 40. “We didn’t have a lot of money when we were younger, so I saw my parents managing their money.”
This is something the entrepreneur – best known for her role as a dragon on BBC’s One’s Dragons’ Den – has instilled into her own children from a very young age.
“I’m in the lucky position whereby I could give my kids anything, but I shouldn’t do that because it’s not helping them understand the value of money,” explained Davies, who has two young sons, Charlie and Oliver, with her husband Simon.
“It’s my job as a parent to equip them for going into the big wide world of being able to take care of their own money.”
She believes talking to children about finances from a young age is very important.
“One of my kids asked me what our house cost a while back, and I didn’t feel comfortable sharing with them the amount of money we’d spent on the house, but I did explain to them about mortgages,” reflected Davies.
“Some people might say that’s a lot for a seven-year-old to understand, but I don’t see why you shouldn’t start and just break those conversations down into easy, manageable chunks for them at a young age.”
When Davies attended the University of York, as soon as her loan came in she would budget her weekly spending and was always shocked at fellow students who would blow it all within the first week.
“One lad, when he got his student loan payment, was buying champagne for his girlfriend and was going to Marks & Spencer to get loads of picky food and having beautiful picnics,” she recalled. “But three weeks into the term, he was living on pasta and pesto sauce because it’s all he could afford.
“I just could never understand why he wasn’t a little bit more organised with his money. It really is: to fail to plan, is to plan to fail.”
As well as budgeting, Davies also outlined the importance of saving early to set yourself up for a stable future.
“I have a lot of young kids working for me, kids coming in on apprenticeships and then kids coming fresh out of university, where they are still living at home – and it’s those ones that I encourage so strongly to be starting a pension fund and to be putting money into savings,” said Davies.
“You should be living comfortably within your means and taking those early years, if you’ve got the opportunity to, to be able to do the saving there as well, and being sensible and planning your money.”
Davies also recommended taking only cash on a night out if you have a tendency to spend beyond your means after a few drinks.
“I think the biggest thing where people go wrong is peer pressure and in-the-moment spending,” said Davies. “If you know that you are someone who goes out on a Saturday night, and when you’ve had a couple of beers you’re more likely to be flashing the cash and buying rounds of drinks, then don’t take your debit card or credit card out with you.
“If all you can afford to spend that night is £50, take the £50 in cash. And maybe an extra spare £10 in the bottom of your sock in case you can’t get home on the night.”
Another finance hurdle many people stumble on is scams, and this is something Davies is passionate about helping prevent.
“I think the best rule of thumb to work on is – if it looks and smells a little bit fishy, it probably is a little bit fishy, so don’t be too trusting,” advised Davies. “The police taught me that the most risky ones [scams] are the ones on the phone.
“So when someone rings up and asks you to do something, you can always say ‘I’m not sure about this, I’m going to hang up and look into it and ring you back’. And it’s a sure fire sign that there’s something wrong if they don’t allow that.”
Davies is working with flexible debit card and app
– a company she decided to invest in on Dragon’s Den – to help families of vulnerable people, particularly those with dementia, to safely manage their everyday spending and avoid scams.
The app notifies family members when a card’s owner has gone on a spending spree or may have fallen victim to fraud. It also allows users to adjust spend and ATM limits and freeze any outgoings if necessary.
“A lot of scams happen online, but Sibstar has a two-factor authentication whereby the person with dementia can still have the independence to go and pay their bills online, but the family are able to check it and go, that looks fishy,” explained Davies.
Alongside fellow dragon Deborah Meaden, Davies is backing Sibstar’s new campaign and calls for both banks and the government to put more measures in place to protect financially vulnerable individuals from scams, social exclusion and fraud.
Visit sibstar.co.uk to see how you can get involved in the ‘Safe Spending For All’ campaign.
