She had fame, success and a lot of money. Now she can’t pay her debts. She’s [...]]]> Martine McCutcheon filed for bankruptcy yesterday. The Mirror dubbed her the biggest soap star since Mr Matey bubble bath. The Times listed her achievements: “a much-loved soap actress, a chart-topping singer, a highly acclaimed musical star, a bestselling novelist….”

She had fame, success and a lot of money. Now she can’t pay her debts. She’s handed her money and property over to the official receiver. She lives on a basic income without luxuries.

Why mention her? Because she, and a fair number of other celebs who acquire fortunes and lose them, are an object lesson for young people. They illustrate the stark, perhaps surprising, truth that you can never have so much money that you don’t have to bother about it.

Some teenagers scorn the idea of money management. Phrases like, “I’m going to be famous” or “When the band gets its break, I won’t need to worry about money” are quite common. Fair enough, you can reply. But fame and success don’t reduce the need to understand and manage money. They increase it.

The problem is that when we buy for ourselves we have, or ought to have, a reasonably good notion of what the value is to us compared with the [...]]]> An economist who has analysed gift-giving isn’t impressed. “An orgy of value destruction and misallocated resources,” is what Prof Joel Waldfogel, author of Scroogenomics, calls it.

The problem is that when we buy for ourselves we have, or ought to have, a reasonably good notion of what the value is to us compared with the price. If something costs £30 we buy it only if we consider that it has at least £30 worth of satisfaction to us, preferably more.

That breaks down when it comes to buying for others. We don’t really know what other people like or what they already have. So there’s a risk that the recipient of our gift wouldn’t value it as high as the asking price. Of course, we could be lucky and get it right. But more likely we won’t. We could use our hard-earned cash to buy something that the recipient would not have spent a penny on.

That’s the problem that Waldfogel identifies. He’s costed it as a waste of $25 billion a year.

So what do you do instead? Gift cards is one answer. But given that only 90 per cent of them get redeemed, that’s an awful lot of waste too. And when retailers collapse, as Comet did recently, they can become worthless.

So is it back to unromantic cash? Perhaps. But Waldfogel does give an element of hope. Buying presents for people you know well is much more likely not to be a waste. The real problem comes when buying for people who you see seldom and don’t know very well. So then the advice boils down to making sure you ask your Gran or distant relatives for cash. But you’d probably figured that out anyway.

The first is from a one-day [...]]]> Money management training works. It can sound dull. It can be hard to persuade people onto training courses and programmes. But once they’ve had a taste of it, they’re often converted. Here are two videos that capture some of the enthusiasm from participants who’ve grown in skills and confidence.

The first is from a one-day simulation run in schools by an education company, Ambitious Minds. Called Keep the Cash!, it challenges students to discuss their aspirations, agree a lifestyle, then make it sustainable, while juggling home and jobs, income, debt and cash flow. Just like adult life.

The second, Quids In, is from financial skills training for social housing tenants. It was delivered by Bedworth, Rugby and Nuneaton Citizens Advice Bureau to tenants of Orbit Heart of England Housing Association. The enthusiasm of those for the budgeting and money-saving exercises are clear. Almost all – 94 per cent – said they would recommend the training to a friend, neighbour or relative.

Young people are great users [...]]]> “Sorry mate, I’ve only got a £20 note.” No problem, I’ve got change. Marc the Big Issue seller was happy to sell a magazine to a friendly-seeming stranger. He wasn’t happy when he tried to spend the note. It was a forgery, worth nothing. That was his day’s earnings gone.

Young people are great users of cash. Even so, they are not very likely to come across a forged note. They are relatively rare and don’t circulate for long. Just under 250,000 counterfeit £20 notes were taken out of circulation last year. Which sounds a lot, but not as a proportion of the 1.6 billion genuine £20 notes in circulation. Perhaps Marc was targeted as a vulnerable person, assumed to lack the confidence or knowledge to check a note.

Key things worth knowing about bank notes

• What are you supposed to do, legally, if someone tries to give you a forged note, in change or for payment? Similarly, what is likely to happen to you if you try using one in a shop?
• What are the security features signs of genuine £5, £10, £20 and £50 notes? How can you quickly identify one?

Answers to these are supplied in the Bank of England’s rather old-fashioned public information video, Take a closer look. It’s 15 minutes long and not very zappy. A good activity for groups of young people might be to distil the key information into a faster, slicker and more memorable format – a rap, a poster or whatever suits.

See a quick summary of the key points, below the video.

Summary of key points

It is a criminal offence to pass on or even hold onto a counterfeit note. If you have one, hand it to the police as soon as possible. You’ll get a receipt. If someone tries to give you one, explain that you think it is counterfeit, give the person a receipt and pass it to the police.

Each value note is slightly different but all have raised print that you can feel, a metallic thread, a watermark. precise print quality, a hologram, microlettering visible under a magnifying glass and a number that appears under ultra-violet light. The £20 and £50 notes also have a see-through register forming a £ symbol and the £50 has a motion thread woven into the paper.

All quite amazing. Much more detail at the Bank of England website.

The team of Paige Sparrow, Ryan Gardener, Alex Mayhew and Shannon Mears from ACT in Bridgend in Wales ran a project on practical ways to cut spending, particularly on food, for themselves and other 16-18 year olds [...]]]> Why are the young people on the right celebrating? Because their money skills have just been recognised.

I just tried to discover what help there is online, starting with the website of the Personal Finance Education Group or pfeg. It says it is the UK’s leading finance education charity. “We provide resources and lesson [...]]]> How do you write a cheque? If you are a bit hazy, how easy is it find out?

I just tried to discover what help there is online, starting with the website of the Personal Finance Education Group or pfeg. It says it is the UK’s leading finance education charity. “We provide resources and lesson plans, help and advice to anyone teaching children and young people about money.”

Sounds good. So I put “how to write a cheque” (without the quote marks) into pfeg’s search engine. “Your search yielded no results”. Hmmm. Perhaps they’re a bit unsure too.

I tried searching with the single word cheque. Success – one result. That linked to The Banking Game. “Skills such as writing out a cheque, paying with a debit card or crediting their account are all included. …”

Great. Except when you follow the link what you get is:

I’m not likely to pay £35 to learn how to write a cheque. Nor are young people. So that’s a dead end. (Apologies to pfeg if I’ve missed anything on their site. If they let me know, I’ll link to what they have.)

The most useful online resource I found on a quick search for how to write a cheque is from the project Money matters to me created by adult educators NIACE. It isn’t cutting-edge design. It isn’t branded as a youth resource. But it has good, sound information. Free. On this cheques page, users can roll over the cheque and see the different elements described. They can then try entering the key information themselves on some examples provided – scroll towards the end of the page and click next.

What’s missing, though, is anything about how managing money underlies these and the other measures used to track happiness. Worth noting:

The latest report on minimum income standards from the Joseph Rowntree Foundation led to headlines about overall costs – a single person needs an income of £16,400 a year before tax. [...]]]> What goods and services do you need to take part in society? And how much would they cost if you added them all up?

The latest report on minimum income standards from the Joseph Rowntree Foundation led to headlines about overall costs – a single person needs an income of £16,400 a year before tax. But it is the process and thinking behind the report that are most of interest to financial educators.

The survey is based on a simple exercise. Put people in a room and get them to agree what is the minimum needed to take part in society.

Then cost it.

This means people debating and trying to come to agreement about such questions as:

• Do you need a car? Does it depend on where you live and what bus services are like? What impact might it have on going out, meeting friends? Or getting a better job, or a job at all?
• How often do you need a haircut? The mayor of London manages without. Can anyone?
• Do you need to buy friends birthday cards and presents? How does it affect life if you don’t, or can’t?
• What about a holiday? If you cannot afford one, does that mean you are missing out on something that society takes for granted? If everyone needs one, how long, how often and where?

The exercise is about society and attitudes. Getting an understanding of that can help prioritise. It focuses on the need to plan for lumpy spending items. It is also helpful for young people to see the sheer number of things that have to be considered in order to live independently and take a full part in society.

For a bit of perspective, it’s also worth knowing that the JRF calculate that a single person needs a net income, after tax and rent, of £193 a week. Benefit, including council tax benefit, would provide £85 a week. That’s £108 a week short of what most people agree they would need.