Transcript Financial Capability - Living and Learning Together

Financial Capability Awareness Session
Paulette Lennon
Why is it becoming more important ?
-Financial products and services have grown - both in their number and complexity over
the last 25 years
Recent survey 70 % thinkthatpersonalfinanceis more complicated.
In 1971 only1 credit card now approx1400 to choose from
-Shift in government -individual responsible for own well being, e.g. saving for retirement,
paying for education (Tuition fee introduction), recently proposed changes in the benefit
system.
-Economic recession -increasing need for individuals to be able to manage their finances, get
the best deal etc.
Consumer Council: Managing Money – how does
Northern Ireland add up?
Results:
-N.I. similar to the rest of UK at “making ends meet.”
-N.I. higher than average at “keeping track” of their finances.
-Only one third planning ahead -lower than rest of the UK.
More then 50% wouldput “good” standardtodaythanplanfor retirement.
-More than a quarter don’t get any independent information or help before choosing a
financial product, like a mortgage.
8 % use unsolicitedmateriali.e.door drop.27% no infoatall.
17% had not read the terms and conditions
-Less informed financial matters –keeping up date
20% not keepinginformed
Characteristics
Less Financially Capable:
Younger (under 35 years)
Not a home owner/ in rented accommodation
No current account
Unemployed/permanently sick or disabled
No or low level qualifications
Being single especially lone parent
Low income
Not born in UK
Financial Inclusion
A state in which all people have access to appropriate, desired financial products and services in order to
manage their money effectively.
It is achieved by financial literacyand financial capabilityon the part of the consumer, and access on the
part of financial product, services and advice suppliers. “(Transact, the national forum for financial
inclusion, 2007)”
Lack of financial inclusion can be due to ;
• Financial services that don’t meet the client’s needs
• Lack of information
• Geographical factors
• Cultural Factors
• Self Exclusion
What is Financial Capability
4 Main Elements:
• Money management(which includes making ends meet and keeping track of
finances);
• Planning ahead(including provision for retirement, use of insurance and
methods for protecting against financial shocks);
• Choosing financial products appropriately; and
• Staying informed of financial matters (which includes basic financial
knowledge).
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Exercise 1
Money Personality Questionnaire
Financial Literacy
Definition of Financial Literacy:
“…the ability to understand finance. More specifically, it refers to an individual’s
ability to make informed judgements and effective decisions about the use and
management of their money.”
( Wikipedia)
Issues:
It is now easier to access information, due to internet, but this has
advantages and disadvantages.
It is not enough to increase access to products -need to ensure
individuals have the appropriate skills.
Essential Skills
1996 InternationalAdultLiteracySurvey (ALS):
-1 in4 performed at lowest literacylevel.
Why are EssentialSkillsimportantin everydaylifein relationto finance?
Personalfinancialmanagement,for example,understandingAPR rates for
personalloansandcredit cards
Helpingchildrenwith homework andsupportingtheireducation
Working out thebest dealswhen shoppingto ensure good valuefor money
Completingforms to applyfor loans,benefits,drivinglicenceor passport
Understandinggas/ electricitybills
ICTnow thethirdEssentialSkill - is thisa potentialbarrier to your clientgroup?
Why is financial Capability Relevant to You ?
Colleagues/ Members:
Increase their confidence indealing withfinances issues /moreincontrol.
Helpthemget thesupport andadvice tocomplete training/gain additional skills.
Inturnhelpmembers increase their employability, moresecure future.
Improvetheir health andwell-being, reduce stress
1in4people withmental health problems reported being indebt orarrears. (Office forNational Statistics 2002)
Foundmajority ofproblems arefinancial illiteracy andlackofaccess todebt help.
Organisation/ Employer:
Higher retention andengagement intraining
Showsaresponsibility ofcaretostaff
Lowerabsenteeism andincreased productivity
Moremotivated /skilled staff.
Embedding financial Capability into your organisation
• Know your members
• Identify what their needs are.
• What barriers to you face.
• Have clear and realistic objectives
• Find different ways to weave money matters
• Try to keep it simple, but relevant.
• Make it practical, fun
• Don’t think you have to do it all yourself, build good relationships.
• Raise staff confidence, commitment and competency early on.
What will your organisational role be?
•Delivering dedicated financial capability programmes
•Embedding financial capability into other programmes
•Offering pastoral support
•Providing information, advice and guidance (IAG) including
signposting learners to external sources of support
•Inviting external organisation such as money guidance workers
and Citizens Advice Bureaux into the organisation to work
directly with learners.
Exercise 2
What do you think are the needs of your colleagues RE: money
issues ?
How do you think within your role you could embed/ help
promote financial capability among members/organisations?
What barriers/ issues do you think could impact on embedding
financial capability within your organisations/among members?
Contact Details
Money for Life
http://www.moneyforlifeprogramme.org.uk
E: [email protected]
T: 028 9024 4274
Money for Life is keen to hear from FE practitioners across the
UK to understand the financial challenges students face
and how well equipped you feel to advise them on money matters.
To take part in the short survey and help us raise awareness of
the
barriers to good money management.
http://www.surveymonkey.com/s/XF238ZS