Presentation on theme: "The Charity for your Community New Year, New You ! My Money Make Over Aileen Hutton & Nichola MacDougall Financial Capability Officer."— Presentation transcript:
The Charity for your Community New Year, New You ! My Money Make Over Aileen Hutton & Nichola MacDougall Financial Capability Officer
Money management education and training from Citizens Advice NI my money aims to empower individuals to budget, borrow and save with confidence!
The Charity for your Community Attitudes to money Banking Choosing Credit Budgeting & Saving Dealing with debt Information & Support
The Charity for your Community Attitudes to money Research finds that attitudes more than age or income are the main influences on how people manage their money. It is these attitudes combined with big events and life changes that will determine whether people need and indeed seek help with their money and whether they are in good financial shape. (Financial Capability Strategy for Northern Ireland DETI)
The Charity for your Community One thing you like spending money on One thing you dont like spending money on
Quiz: Why does money matter? 1.When it comes to saving money: A. I know I ought to be saving, but I never seem to be able to. B. I really enjoy saving. In fact, I spend a lot of time and energy thinking about how to save. C. I have trouble saving money, and l worry about it sometimes. D. I only save for things I really want or need. 2.When Im feeling down in the dumps: A. Spending money does not cheer me up. B. Thinking of ways to make more money makes me feel better. C. l always spend money to cheer me up. D. Spending just makes me feel worse. Spending has nothing to do with happiness. 3. If I won a million pounds in the lottery, l would be: A. Totally overwhelmed. I would have no idea how to handle it. B. Very happy. I would start thinking about how to invest my winnings. C. Wildly excited. From now on I could buy anything I wanted. D. Feeling a little guilty. I would think about how to use some of my money to help others.
So how did you go? If you answered mostly As – you are an AVOIDER – you put off making money decisions. If you answered mostly Bs – you are a COLLECTOR – you like to see your money make money. If you answered mostly Cs – you are a SPENDER – you enjoy spending and think little about how to pay for your purchases. If you answered mostly Ds – you are a THINKER – you care about others who have less than you, and you often feel guilty about having more than they do.
Financial and digital exclusion An individual may have all the necessary skills, knowledge, attitudes and motivation to manage their money but may be restricted from managing their money effectively due to external factors such as access to technology. 1 in 5 people in the UK do not access internet The Charity for your Community
Money management Northern Ireland (Financial Capability Strategy for Northern Ireland DETI) More likely to have a cash budget. Better at keeping track (particularly in lower income households) Less good at planning ahead Less likely to get insurance Less likely to be active financial consumers
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The Charity for your Community Types of accounts Basic Bank account Current account Saving accounts Post office Accounts Credit Union
The Charity for your Community In Northern Ireland we have the lowest proportion of households with current accounts compared to rest of the UK.
Other options Post office account Allows deposits and cash withdrawal for a range of basic and current accounts. Can only be used to receive benefit, state pension and tax credits. A simple account that wont let you go overdrawn or incur charges. No credit checks are carried out when opening this account. Credit unions Are owned and run by members for members. Members have a common bond such as living or working in a specific area. Encourage you to save money. They will let you borrow what you can afford to pay. Lower interest rates. A credit union may suit if: You cant get a bank account Flexibility of saving what you can when you can Local support for managing your money
The Charity for your Community Banking Common Banking problems – Choosing an account – Bank charges – Getting identification – Problems with bank charges – Remembering PIN numbers – Getting access to money – Keeping track of money – Dealing with direct debits – Dealing with call centres Why have a bank account? – Financial history – Paid wages/benefits – Pay bills automatically – Keep money safe – Online shopping – Access to ATM – Manage money easier-online or statements
What are the benefits to Online Banking Its FREE View your account online 24 hours a day, 7 days a week. – Check your balance – Pay bills – View statements & Download – View recent transactions – Manage standing orders and Direct Debits – Transfer Money Between Accounts Some accounts let you set weekly alerts /reminders to your phone
Switching banks: why are we more loyal to our bank than to a partner? We stay with our bank for 17 years, but only stay married for 11, which is why we may resist seven-day switching!
Get better rate of interest on your money Better customer service Minimise overdraft, bank charges Added extras like free money or deal on travel insurance. Cashback on utility bills etc Ethics – move your money campaign Why Switch?
How to switch in 7 days Three -step process is: 1)Go to new provider/bank - You fill in an application form and a transfer form and provide some proof of identity. 2) The new provider checks which payments you want moved across and sets them all up, while getting your previous account provider to cancel the old ones. 3) Your account will be set up and if you want your balance transferred and old account closed this will be done. Debit and pin number arent covered in the 7 day guarantee… can take up to 10 working days
Before you switch – Get the right account Do you get rejected when you apply? Most current accounts require a credit check, where the bank assesses whether it wants you as a customer. You may be rejected for one of many reasons. Don't assume because one doesn't want you, none of the others will. Are you always in credit? If you never touch your overdraft, not even by a pound or two, you should grab the account that pays the most interest on your positive balance. Do you go overdrawn? If your balance creeps into the red or stays permanently overdrawn, you need an account that charges you as little for using your overdraft as possible.
Do you pay a fee for your bank account? Now, think about whether youve ever used those facilities. Are they worth the price? For some they're not, but others save £100s/year. Don't bank where you've got debts If you've got debts with the same provider you bank with, a rule called 'settingoff' means it can take cash without warning to pay down the debts. The Charity for your Community
The first thing to do is to talk to the bank, no matter what your problem is – whether you are disputing a payment, complaining about bank charges or simply unhappy with the service. Every bank has a formal complaints process to deal with problems and complaints. If you use it and still arent satisfied, you can take the complaint further with the Financial Ombudsman Service. How to deal with problems with your bank
The Charity for your Community Word method Create new pin number from a word using the number and letter system on your mobile. Word 9673 Date method Use a significant date such as a birthday/anniversary. Better to use someone else's not your own.30 th April =3004 Mobile method Add a fictitious friend on your phone and the last 4 digits can be the pin number. George Clooney !!! Remembering Pin Numbers
The Charity for your Community Choosing credit
The Charity for your Community Types of credit Personal loan Store card Credit card Door step lender Payday loan Overdraft Hire Purchase
The Charity for your Community Choosing Credit Important note Interest rates can vary considerably as there are a number of factors that are taken into account such as; the individuals credit rating, the size of the loan, current market rates.
APR /Annual Percentage Rate /Interest £If you borrow money at a 10% interest rate for a year, it will cost you 10% of the amount borrowed to do so. £100 will cost £110 £This needs to be repaid along with the original money you borrowed. £The higher the interest the more you have you pay back.
The Charity for your Community The cost of credit Sandra, Alex, Kyle and Carlos each need to borrow £100. Sandra buys what she needs on her credit card. She pays back £9.50 a month over 1 year. £9.50 x 12 = £114 Alex borrows the money from a doorstep lender and pays back £3.50 a week over 1 year. £3.50 x 52 = £182 Kyle gets a bank overdraft and pays £5 a month over 2 years. £5 X 24 = £120 Carlos gets a loan from the credit union and pays back £9 a month over 1 year. £9X12= £108 1.Who pays the most interest? 2. Why would someone choose the more expensive options?
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Payday loans are short-term loans designed to tide you over until payday, but theyre an expensive way to borrow. You should only ever get a payday loan if youre 100% certain you can repay it on time. According to Which?, the average payday lender charges £25 interest for every £100 borrowed if you pay it back within 28 days. Thats an APR of 1,737%. As a comparison, the average credit card would charge you £1.50 at an APR of 18%.
If you cant pay back the loan on time, the fees and interest can soon mount up. If you extend your loan you will have to pay more interest and possibly other fees. You could be left with an unmanageable debt as the costs can quickly increase. You may also find it easy to get another payday loan from a different company at the same time. Its important that you avoid taking out more than one payday loan at a time. The Charity for your Community
£ How much do you have to pay each month or week? £ For how long? £ Whats the APR? £ What do you have to pay back altogether? £ Are there cheaper ways to get the money you need? £ If the offer is 0% interest for a certain period, how long and what is the interest when its over? £ Is the credit agreement clear? Can you take it away to look at before you sign it? £ If insurance is included – is it useful, or cheaper elsewhere? £ Can you afford the repayments? £ What happens if you miss a payment? Choosing credit tips Find out ………
The Charity for your Community Budgeting & Saving
The Charity for your Community A budget is nothing more that a list of your income and expenditure. Income is wages, benefits, maternity pay etc Expenditure – Everything that goes out - Rent/mortgage, Household bills, Travel costs, Christmas!! Keep a spending diary as its easy to underestimate how much we spend. Hold on to receipts, bank statements. Set a date to tackle your budget with all this information. BUDGETING
The Charity for your Community Why budget? Avoid getting into debt Successful budgeting creates strong spending and saving habits. Plan and save for the future Feel more in control and less stressed about money
The Charity for your Community Budget tips It is worth re-doing a budget when things change such changing jobs, having a baby etc Use weekly or monthly amounts – dont mix them up! Use a calculator To convert weekly monthly: x 52, then, 12 To convert monthly weekly: x 12, then, 52 Make sure amounts are realistic Keep a record of bills Make a rough copy first, so you can make mistakes Dont forget travel costs, fines If there are any loan repayments, include these Include an amount for emergencies and things like Christmas and birthdays
Budgeting and Saving tips Good budgeting can help keep you out of debt or allow you to save Switching - See how much you can save Bank accounts Gas, Electric, Oil Phone - home and mobile Broadband Digital services Insurance Credit, loans Consumer council comparison on providers of essential services in Northern Ireland
Benefit Check – see local CAB De-clutter & sell it – ebay, gumtree, carboot sale Loyalty reward team - Vouchers/Points – Tesco, Nectar, Boots Money off coupons Grants – home/small businesses Tax rebate for uniform wearers Check if you're due a tax rebate Find lost assets Get paid to click – paid online surveys - The key is while some of these sites pay small amounts, add them all together and it can turn into an annual bonanza of £1,000s. The Charity for your Community Buy one and get one free Bulk buy Turn heating down 1° Downshift shopping Switch to cheaper fuel supplier Get discounts for paying bills by direct debit Make a shopping list and stick to it (Dont shop when hungry) Join a library or toy library Make packed lunch instead of buying Join school car run and save petrol costs My Money Making Tips Some different ways for you to maximise your income
Martins Money Mantras
SAVE A BUNCH PACK A LUNCH Homemade lunch rather than bought? £5x5 days =£25 per wk x 52 wks per year Potential saving £1300 Going for Coffee ? £2 x 5days x 52 wks = £520 per year on coffee (not including a scone!) Quit smoking ! £6 x 7days x 52 wks = £2184 Saving weekly rather than monthly £20 x 12=£240 £5x52 = £260 Weekly savings
Having a budget can help you manage your money, avoid getting into debt, plan and save for the future and feel more in control and therefore less stressed about money. It can be extremely difficult to save if youre living on benefits or a very low income but even a very small amount of savings can make a difference – £1 a week is £52 by Christmas! It is important to know that SAVING is a part of budgeting and can help stop you getting into debt by putting money aside for things you know are coming up bills, Christmas or other festivals or for emergencies.
Start teaching your children about saving and budgeting from an early age, make it a HABIT! If youre an impulse buyer give yourself a cooling off period, you may find you arent as keen 24hrs later. Set alarms or dates in your diary 6 weeks before your 0% credit card deal or insurance is up to shop around.
The Charity for your Community Dealing with debt The Charity for your Community
Credit is debt under control. Debt is credit out of control.
Causes of Debt High spending on consumer goods and entertainment Losing a job/unable to get a new job Leaving home Being ill Becoming disabled Moving into new home A bereavement Problems with benefits such as delays, overpayments Low levels of benefits, training allowances and wages Having a baby Drug or alcohol dependency Remaining in education Problem gambling A relationship ending Debt is often associated with unexpected changes in life. It could be the loss of income or arrival of one or more bill or both The Charity for your Community
A priority debt is one where, if it is not repaid, could lead to: Eviction Prison Disconnection OR The client needs the debt to be treated as a priority PRIORITY DEBT
The Charity for your Community Priority billsConsequences of not paying Electricity and gas You could be cut off Pre pay meter installed Rent or mortgage You could lose your home TV licence You could have money taken from your benefits or wages You could get a very big fine You could go to prison Maintenance for others, including support for children You could have money taken from your benefits, wages or bank account You could go to prison Secured loan (A loan that is taken out using your home as a guarantee) You could lose your home Court fines A court-appointed enforcement officer can be sent to take your belongings and sell them to pay your debt. You could have money taken from your benefits or wages. You could go to prison.
The Charity for your Community Non - Priority billsConsequences of not paying Mobile phone contract Credit cards Store Cards Personal Loans (unsecured) Overdrafts Payday loans Doorstep Lender These are often called credit debts You cannot be imprisoned You may be taken to court and ordered to repay the money Your credit rating may go down making it harder for you to borrow in the future The amount you owe may go up a lot due to the interest charged Loans from friends/family Personal Debts are not classed as priority debts but they can be very significant. Relationship breakdowns with friends and family over money can have a serious impact on person emotionally and practically. Loan sharkIt is illegal to lend money without a license. These people charge a high rate of interest. The consequences of not meeting repayments is often unpleasant involving threats and even violence. Benefit over paymentCan be directly deducted from benefits Other bills and debts (non priority debts)
The Charity for your Community There are many different reasons why we get into debt. Knowing what can happen when certain bills and debts are not paid can help us to prioritise the most important ones and avoid the most serious consequences.
The Charity for your Community Dont ignore the problem/tell someone as it wont go away! Get in touch with your creditors and explain the situation and that you are getting help with your debt. Always keep copies of letters received from creditors Dont borrow more money Work out a personal budget Get advice from Citizens Advice or another independent advice agency Dealing with debt
The Charity for your Community Where to get help and support
The Charity for your Community Sources of help and advice on money matters Citizens Advice Advice NI Debt Action NI Consumer council Credit Union MLA advice centres Christians against poverty Support workers/Community associations Online services – beat the recession/money advice service
The CAB Network 28 main offices (bureaux) Over 110 outreach services Bureaux provide advice and information to people in need in over 140 locations HOW WE DELIVER SERVICES Face to Face Phone Digital Services Adviceguide A2B Calculator Projects – CAB mymoney Legal Support
CAB offer information and advice on the following issues Welfare benefits Employment Consumer Immigration Legal Health Debt and Money Advice Housing Education Tax Utilities Relationships
Useful free websites Adviceguide The following website will give you the information you need to make the right choices, including help to deal with your debt problems, how to avoid losing your home and how to get your finances back into shape. Beat the recession This website provides information and advice on Money and Debt issues for people affected by the recession in Northern Ireland. Use the links to view frequently asked questions, download useful resources in the helpful Tools section, and chat online with our experienced advisers Advice4debtni (a4e)www.advice4debtni.com Free, government funded, independent debt advice for the people of Northern Ireland Consumer Council for Northern Ireland The Consumer Council works to help all consumers gain the skills and confidence to manage their money and make it work for them. Advice NI - Advice NI's Debt Action NI website offers a series of self help fact sheetshttp://www.debtaction-ni.netDebt Action NI and leaflets, a Frequently Asked Questions section provides answers to the most common money/debt advice queries. Debt Action NI Advisors provide money/debt advice throughout NI. This is a free, confidential and impartial service open to everyone. Money Advice service - At the Money Advice Service we believe that the right money advice can make a real difference to your life. Financial Ombudsman - The Financial Ombudsman Service washttp://www.financial-ombudsman.org.uk set up by law as an independent public body. Our job is to help settle individual disputes between consumers and businesses providing financial services - fairly, reasonably, quickly and informally.