advanced saving session - trainer notes - citizens advice resources... · 3 ©2015 citizens advice...

Advanced saving

Guidance for conversation on saving

Trainers notes for advanced saving with clients

2 ©2015 Citizens Advice Advanced saving trainer notes/Sep16/v2

Citizens Advice financial capability

This session pack has been produced as part of Citizens Advice Financial Skills for Life.

Copyright © 2015 Citizens Advice All rights reserved. Any reproduction of part or all of the contents in any form is prohibited except with the express written permission of Citizens Advice. Citizens Advice is an operating name of the National Association of Citizens Advice Bureaux, Charity registration number 279057, VAT number 726020276, Company Limited by Guarantee, Registered number 1436945 England. Registered office: Citizens Advice, 3rd Floor North, 200 Aldersgate Street, London, EC1A 4HD

Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, Citizens Advice assumes no responsibility. The user of the information agrees that the information is subject to change without notice. To the extent permitted by law, Citizens Advice excludes all liability for any claim, loss, demands or damages of any kind whatsoever (whether such claims, loss, demands or damages were foreseeable, known or otherwise) arising out of or in connection with the drafting, accuracy and/or its interpretation, including without limitation, indirect or consequential loss or damage and whether arising in tort (including negligence), contract or otherwise.



Advanced Saving The aim of this session is to help advisers to provide a session to clients that will encourage them to use financial products to help them save money. This session is specifically aimed at those clients who are able to save, but need assistance in making informed financial decisions with their savings. Objectives are that by the end of this session clients will be able to:

• Understand why the existence of inflation affects them

• Understand how savings products can off-set inflation

• Be aware of good practice when saving, and saving products

• Find online saving tools and calculators that will benefit them.

General guidance notes on delivering a group financial capability session are available elsewhere on the Citizens Advice website. These notes are for the trainers use only. A separate handout pack should be used with every client in the group, which will include signposts for further information and guidance.

Trainers are encouraged to feedback to the Financial Skills for Life team with any feedback about training materials or resources. If you have any comments, please contact: [email protected]

mailto:[email protected]



Contents

Session specific guidance 5

Lesson plan 7

1. Advantages of saving 8

2. Inflation and Interest 10

3. Protecting your savings 11

4. The best places to save 16

5. Online savings tools 18

Evaluation 19

Trainers notes 21



Session specific guidance Subject information Trainers do not need to have specialist money advice knowledge or experience but must be reasonably numerate and be able to signpost learners to sources of further advice and information. The pack contains all the key information for the topics covered. Any additional information that is given should be taken from an up to date and accurate source such as:

• the money management section of www.adviceguide.org.uk

• the Money Advice Service free leaflets at www.moneyadviceservice.org.uk including ‘borrowing money’, ‘credit cards’ and ‘credit unions’

This session aims to help learners understand financial saving products. For more information, clients should be referred to their local Citizens Advice or other advice agency. Materials

• Blank flip chart paper • Marker pens • Note paper and pens for learners • Blu tack • Calculators • Prepared cut-outs for word-matching activity

Manage expectations – Make it clear to clients that the session is a brief overview of saving products, and the most essential elements of financial capability that relate to it. As a one-off session, there will not be the time to explore any single element in any great detail. Signpost and empower – Ensure that clients are aware that after the session they will have a clear idea where to go to answer outstanding queries and to get further assistance.

http://www.adviceguide.org.uk/

http://www.moneyadviceservice.org.uk/



Top tips



Lesson plan Red activities – Are essential to any session on this topic Amber activities – Are highly recommended but not essential Green activities – Are optional activities, if time allows The size of the bubble indicates roughly how much time, relative to the session, to spend on an activity.

1

2

3

This session is intended to take about 45 minutes to deliver. Activity two involves maths that can be quite intimidating; the adviser may choose to simply discuss the factsheets and worked examples, and then leave the actual exercise. This is at their discretion. 4

5

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Activity: advantages of saving

As usual, this activity is suited to both group and one-to-one sessions. A group session would follow the more activity-driven format below, whereas engaging with a single client would be a more conversational rapport-focussed session.

• Put the learners in pairs and ask them to come up with as many advantages of saving as they can in approximately 3 minutes.

• Discuss the reasons given as a group

o Is anyone surprised by the suggestions?

o Does anyone have any more suggestions now that they have seen the others?

• Ask the group if they can think of any disadvantages or challenges of

saving and how they might overcome these challenges. Advisers should use the following discussion to shape subsequent activities.

Advantages of saving may include:

• It helps you achieve your goals.

• To protect you against emergencies.

• It gives you confidence and peace of mind.

• You can use your savings for whatever you want.

• It helps avoid debt.

• You may get paid interest to save, whereas it costs to borrow.

AIC 20 – N



Disadvantages of saving may include:

• You may have to make cutbacks elsewhere.

• You have to wait and may possibly miss an opportunity to get the thing you want.

• You may have to have some challenging discussions with family members, partners and friends who are used to you spending your money in certain ways and may not be happy to see you cut that spending in order to save.

• Clients who are Muslim may state that interest-based saving, and borrowing, is against their beliefs. For these clients, Sharia-compliant financial products are advisable.

If a discussion about interest arises: Interest is the money that the bank or building society gives you on top of the money that you have saved with them and is described as the Annual Equivalent Rate (AER). The higher the AER the more money you earn on your savings. For example if you opened a savings account and put in £100 at the beginning of the year, and the AER was 4%, at the end of the year you would have £104 in the account. If the AER was 1%, you would only have £101 at the end of the year. If the adviser thinks it is a good idea, they can discuss the concept of inflation and the increasing cost of goods in real terms, as an incentive for the client to save. Note: The difference between gross rate and AER is complex and normally quite small.

If this was useful, why not try:

• Saving – inflation and interest



Activity: inflation and interest

This activity requires a reasonably high level of numeracy. Provide the factsheets (B2) first and use the discussion here to assess the client’s confidence with numbers. If it seems suitable, then the adviser should continue by encouraging them to complete the exercise on the final sheet. Answers

Savings Inflation Real costs

Current account

Savings account ISA

Year 1 £200 1%

£202 £200 £201 £204

Year 2 Add £200 1%

£204.02 £400 £403.01 £412.08

Year 3 Add £200 1%

£206.06 £600 £606.02 £624.32

Year 4 Add £200 1%

£208.12 £800 £810.05 £840.81

The critical result here is for the client to understand that only a saving rate that exceeds inflation allows them to retain their buying power. It can help, for illustrative purposes, to divide the final result by 4 to highlight what that buying power is for £200. For example, in the case of the ISA, £840.81 means that the client has turned each £200 into £210.20, which just about exceeds the real increase in costs.

AIC 20 – N



Activity: protecting your savings

Provide the client(s) with a set of the savings product cards and the features cards, from the handouts. As usual, this can be done individually or in groups of varying size. Ask them to match each savings product card with the correct features card.

Give out the Savings products handout to check the answers and answer any questions. Top Tips

• Make sure when you cut out the features cards that you only cut out the boxes on the handout and don’t include the name of the product.

• You should emphasise that some types of saving, such as rainy day or emergency money, should be kept very safe and be available instantly when they are needed.

• Other types can be planned in advance, like home improvements or holidays. These can be kept in notice or fixed term accounts where there will be less temptation to dip into the money early.

• Not every possible type of savings account is described here, only the simpler ones most suited to very short term saving. If you are asked about other types of accounts like ISAs or for detailed information on the products then you can point the learners towards the Citizens Advice website.


• Saving – the best places to save • Saving – online saving tools

AIC 20 – A N



Matching game cards to copy and cut out

Credit Union account

Instant access savings account

Notice account



Supermarket savings stamps

Fixed term bond

Current account



• Usually pays a lower rate of interest which may change over time

• May come with a cash card

• Available from banks and building societies

• Often need to save a large amount to open this type of account

• May not allow withdrawal of savings prior to maturity

• May pay a bonus

• Doesn't pay interest. Pays a dividend once a year. • Can use your savings as security for a loan • Savings are protected under the Financial Services

Compensation Scheme (FSCS)



• Have to tell the company in advance if you want to

withdraw money and then wait a fixed time

• If you want your money straight away you will lose the interest payment or bonus

• May pay a bonus

• Savings are usually NOT protected in case the company

goes bust

• If you lose the card with your stamps on it you may lose all of your savings

• Can only spend your savings in certain shops

• Can make payments out by direct debit and standing order

• Usually comes with a cash card and debit card

• Available from banks and building societies and some credit unions



Activity: the best places to save

Providing handout B4, ask the client to try to answer the following questions. Discussion of the answers should lead to further discussion and activities, including:

• Whether to save at home or in a bank/building society. • Whether to save in a current account or an ISA. • Discussion of what an ISA is and how the tax-free element works. • How easy it is to shop around to compare interest rates.

Answers

1. What is the difference between saving and investing? Saving is when you put money away in safety, you’ll definitely get it all back plus interest. Investing is when you take the risk of potentially losing some of your savings for the chance it'll earn a lot more interest than it would in a safer place.

2. Do you pay tax on the interest your savings earn? Any interest you earn on savings that aren’t in an ISA will liable for tax. For higher rate taxpayers, the tax rate is 40% of their interest, and for everyone else it’s 20%.

3. How safe is your money if your bank or building society goes bust? Provided your money is in a UK regulated bank or building society account, it’s protected under the Financial Services Compensation Scheme (FSCS). This means that £85,000 is guaranteed per person, per financial institution. This is changing to £75,000 on 1 January 2016.

4. Do credit unions offer interest on savings? They do, and sometimes these rates can even be better than high street banks and building societies. It’s always worth asking around.

AIC 20 – A N



5. What is the current ISA limit? £15,240 for the tax year 2015/16.

6. Are the saving rates for under-16’s better or worse than the rates

for adults? Under-16s can sometimes get better interest rates, but as they're not taxpayers there are limits on this you need to be careful of.

7. What is an introductory rate? Introductory bonus rates are temporarily high interest rates to attract new customers. They are normally for around 12 months, but after that time, the rate will often drop to almost nothing. The bank offers them as it hopes people won’t bother switching once they have an account.

8. What is the gross rate? Banks quote one of two different interest rates. The gross rate is the flat amount paid.

9. What are the two types of ISA? The two types of ISA are: o Cash ISA’s, which are very safe savings. o Stocks and shares ISA’s which have an element of risk as they are

investments.

10. What is the Annual equivalent rate (AER)? Banks quote one of two different interest rates. The Annual Equivalent Rate (AER) takes into account interest compounded over the year.


• Saving – protecting your savings • Saving – inflation and interest



Activity: online saving tools

This activity requires online access in order to show and go through the recommended saving tools with the client. Recommended tools include:

• Money Advice Service – savings calculator

• Money Advice Service – estimate what you need to save for retirement

• Money Advice Service – Christmas savings planner

• Money Saving Expert – regular savings calculator Advisers should try to encourage clients to add realistic figures in these tools. This can also lead to conversation about realistic saving goals for the client.


• Other resources from the Digital Money Coach Toolkit?

AIC 20 – N

https://www.moneyadviceservice.org.uk/en/tools/savings-calculator

https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

https://www.moneyadviceservice.org.uk/en/tools/christmas-money-planner

https://www.moneyadviceservice.org.uk/en/tools/savings-calculator

Evaluation Guidance Areas that underpin client financial capability These are the Citizens Advice Financial Capability Areas that were carefully researched and developed by The Impact Team at Citizens Advice to help local offices measure client financial capability robustly and consistently across services. They were developed in line with the MAS UK Financial Capability Strategy Adult Outcomes Framework. Sample questions and scales can be found overleaf. An Impact Tool is available in Petra for recording responses and progress.

Keeping track of money Controlled spending

◉ Keep track of money going out, money coming in and calculate what's left over. ◉ Check my current balance and keep my papers in order.

◉ Spend or save only what I can afford after covering the basics I need to live, like food, housing and electricity.

Having enough money to live Planning ahead with money

◉ Have enough money to cover the basics I need to live like food, housing and electricity.

◉ Know when my bills and payments are due and keep on top of priority bills, like for electricity, loans and council tax. ◉ Put some money aside for big or unexpected costs.

Looking for the best deals Staying informed about money services

◉ Look at different options and buying the best deal for things like food, clothes, large items or services like phone, electricity or insurance. ◉ Get different opinions on what I am buying, like from reviews and comparison websites.

◉ Read the main information about money services I get like banking, benefits and loans. ◉ Stay on top of changes to these or get help when I don’t understand.

Mindset

◉ Confidence about taking action on my money matters.

Copyright © 2015 Citizens Advice All rights reserved. Any reproduction of part or all of the contents in any form is prohibited except with the express written permission of Citizens Advice. Please note these areas, questions and scales are owned by Citizens Advice and subject to copyright restrictions so reproduction must include the relevant copyright statement above and no changes to its wording, response categories or layout must be made. For further information please contact Satdeep Grewal on [email protected] or 03000 231 608.


Sample questions and scales for measuring client financial capability These questions can be used to ascertain how good someone’s financial capability is and so, what their level of need is. They also allow you to track progress by being used to follow-up with how someone is getting on after you have helped them.

Score 1 to 3 Score 4 Score 5 to 7

Low financial capability Average financial capability Advanced financial capability

High need Medium need Low need

Keeping track of money ◉ Calculate money going out, money coming in and what's left over. ◉ Check my current balance and keep my papers in order. Rate your knowledge about the above

No knowledge

No to some knowledge

Some knowledge

Some to good

knowledge

Good knowledge

Good to excellent knowledge

Excellent knowledge

Don’t know

1 2 3 4 5 6 7 ▢

How often do you do the above?

Never Never to sometimes

Sometimes

Sometimes to often

Often

Often to very often

Very often

Don’t know

1 2 3 4 5 6 7 ▢

Staying informed about money services ◉ Read the main information about money services I get like banking, benefits and loans. ◉ Stay on top of changes to these or get help when I don’t understand. Rate your knowledge about the above:

No knowledge

No to some knowledge

Some knowledge

Some to good

knowledge

Good knowledge

Good to excellent knowledge

Excellent knowledge

Don’t know

1 2 3 4 5 6 7 ▢

How often do you do the above?

Never Never to sometimes

Sometimes

Sometimes to often

Often

Often to very often

Very often

Don’t know

1 2 3 4 5 6 7 ▢

Mindset How much confidence do you have about taking action on your money matters?

No confidence

No to some confidence

Some confidence

Some to good confidence

Good confidence

Good to high confidence

High confidence

Don’t know

1 2 3 4 5 6 7 ▢

Copyright © 2015 Citizens Advice All rights reserved. Any reproduction of part or all of the contents in any form is prohibited except with the express written permission of Citizens Advice. Please note these areas, questions and scales are owned by Citizens Advice and subject to copyright restrictions so reproduction must include the relevant copyright statement above and no changes to its wording, response categories or layout must be made. For further information please contact Satdeep Grewal on [email protected] or 03000 231 608.




Trainers notes

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