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 % think that personal finance is more complicated. In 1971 only 1 credit card now approx 1400 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% would put good standard today than plan for retirement. - More than a quarter dont get any independent information or help before choosing a financial product, like a mortgage. 8 % use unsolicited material i.e. door drop. 27% no info at all. 17% had not read the terms and conditions - Less informed financial matters – keeping up date 20% not keeping informed

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 literacy and financial capability on 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 dont meet the clients 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).

Exercise 1 Money Personality Questionnaire

Financial Literacy Definition of Financial Literacy: …the ability to understand finance. More specifically, it refers to an individuals 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 International Adult Literacy Survey (ALS): - 1 in 4 performed at lowest literacy level. Why are Essential Skills important in everyday life in relation to finance? Personal financial management, for example, understanding APR rates for personal loans and credit cards Helping children with homework and supporting their education Working out the best deals when shopping to ensure good value for money Completing forms to apply for loans, benefits, driving licence or passport Understanding gas / electricity bills ICT now the third Essential Skill - is this a potential barrier to your client group?

Why is financial Capability Relevant to You ? Colleagues/ Members: Increase their confidence in dealing with finances issues / more in control. Help them get the support and advice to complete training/gain additional skills. In turn help members increase their employability, more secure future. Improve their health and well-being, reduce stress 1 in 4 people with mental health problems reported being in debt or arrears. (Office for National Statistics 2002) Found majority of problems are financial illiteracy and lack of access to debt help. Organisation/ Employer: Higher retention and engagement in training Shows a responsibility of care to staff Lower absenteeism and increased productivity More motivated / 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 Dont 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 E: T:

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.