financial capability awareness session paulette lennon

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Financial Capability Awareness Session Paulette Lennon

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Page 1: Financial Capability Awareness Session Paulette Lennon

Financial Capability Awareness Session

Paulette Lennon

Page 2: 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.

Page 3: Financial Capability Awareness Session Paulette Lennon

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 don’t 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

Page 4: Financial Capability Awareness Session Paulette Lennon

Characteristics

Less Financially Capable:

Younger (under 35 years)Not a home owner/ in rented accommodationNo current accountUnemployed/permanently sick or disabled

No or low level qualificationsBeing single especially lone parentLow incomeNot born in UK

Page 5: Financial Capability Awareness Session Paulette Lennon

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 don’t meet the client’s needs• Lack of information• Geographical factors• Cultural Factors• Self Exclusion

Page 6: Financial Capability Awareness Session Paulette Lennon

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).

Page 7: Financial Capability Awareness Session Paulette Lennon

knowledge

how to

informationwhere toabout

awarenesswhy to

skills

numeracy

literacy

soft

attitudes

psychological

cultural

behaviour

doing things differently

making ends meet

planning aheadstaying informed

cho

osi

ng

pro

du

cts keep

ing

track

Page 8: Financial Capability Awareness Session Paulette Lennon

knowledge

how to open a bank account

informationAbout bank accounts and where to open

skills

How to fill in forms, read and reconcile a statement

attitudeswhy it might be important to have a bank account

behaviour

Having opened an account, using it effectively

making ends meet

cho

osi

ng

pro

du

cts keep

ing

track

Bank account example

awareness

What are the psychological/cultural barriers to opening an account

Page 9: Financial Capability Awareness Session Paulette Lennon

Exercise 1

Money Personality Questionnaire

Page 10: Financial Capability Awareness Session Paulette Lennon

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.

Page 11: Financial Capability Awareness Session Paulette Lennon

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 forpersonal loans and credit cards

Helping children with homework and supporting their educationWorking out the best deals when shopping to ensure good value for moneyCompleting forms to apply for loans, benefits, driving licence or passportUnderstanding gas / electricity billsICT now the third Essential Skill - is this a potential barrier to your client group?

Page 12: Financial Capability Awareness Session Paulette Lennon

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 stress1 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 trainingShows a responsibility of care to staffLower absenteeism and increased productivityMore motivated / skilled staff.

Page 13: Financial Capability Awareness Session Paulette Lennon

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.

Page 14: Financial Capability Awareness Session Paulette Lennon

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.

Page 15: Financial Capability Awareness Session Paulette Lennon

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?

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Contact Details

Money for Life http://www.moneyforlifeprogramme.org.uk

E: [email protected]

T: 028 9024 4274

Page 22: Financial Capability Awareness Session Paulette Lennon

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