No longer updating

It's a shame, but I'm no longer updating this website. Busy setting up new ventures.

I'll leave it up for anyone who's interested.

Thanks to all regular readers, and all the best for the future.

Cheers, PJ

Youth money thoughts

Anyone can learn about money.

Anyone can help anyone else learn.

Making mistakes doesn't mean you're hopeless.

Managing money is a lot about relationships & understanding other people.

Good financial education is not about turning people into more savvy consumers.

Good financial education starts with young people's interests and builds on their strengths.

Stop buying presents (maybe)

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.

Money skills that satisfy

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.

Your cash ain't nothin' but trash

“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.


Campaign for financial education

At school and disappointed by the personal finance education on offer? Campaign for it, using a toolkit produced by other young people. Focused on the skills and approaches to campaigning, Our Money, Our Future has a lot of good sense about building a team, starting from strengths, co-opting an adult champion and setting objectives.

Including a briefing for teachers, a case study and background information, the material was produced by young people working with the National Children’s Bureau and the Personal Finance Education Group.

Money for life

Why are the young people on the right celebrating? Because their money skills have just been recognised.

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 at their training centre. Using their slogan, Don’t Buy Posh, Save your Dosh, they set up a value cafe (a three-course meal cost £1.66 per person), cooked a meal for a local community group Mental Health Matters, ran blind tastings, and actively spread the word about shopping and preparing meals on a tight budget.

Their efforts were recognised in April this year when they won the grand final of Money for Life Challenge, a project run by Toynbee Hall in London and other partners around the UK. It is supported by a high-street banking group. As well as developing, practising and sharing life-long money skills, the team also found levels of confidence, teamwork and leadership skills they never knew they had.

This year’s Money for Life challenge is now accepting entries from young people in some form of further education, training or adult or community education. The deal is that a team of learners aged 16 to 24 can apply for a £500 grant to devise novel ways to teach others how to manage money. The young people will have £200 to spend on their money management projects. Their organisation takes the rest as a no-strings grant. Since organisations can have up to ten teams, that suggests a grant of up to £3,000 is theoretically on offer.

Online applications are now open, until 23 November. Read the details of the application requirements or just browse the website.


Cheque basics

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:

banking game on pfeg website

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.

Money and happiness

Data on how happiness relates to health and to where people live was released this week by the Office for National Statistics. This makes sense. Both affect people’s well-being.

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

  • Managing money is a life-skill that is key to well-being. It helps people operate in society and to become who they want to be.
  • Poor money management leads to ill health.
  • The way we manage money affects our well-being now – and also has a lasting impact on life satisfaction in the future.
  • Feeling in more control of your money makes a bigger contribution to psychological well-being than an increase in income.

These points were all made to the consultation on setting up the measures by the Money Advice Service. (Download the MAS consultation response as a pdf). The ONS has responded by including two experimental measures:

  • Percentage of the population who report that they are finding it quite or very difficult to get by financially
  • Percentage of the population who are satisfied with their household income

Data on these will presumably be published sometime in the future. Meanwhile the ONS says it is still looking for a measure of financial security. And it welcomes further comment on this and on the financial measures above.

The minimum for living

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.

Is there a job at the end of it?

Is it worth signing up for a course in health & beauty? Can a successful media student expect a job in the creative industry? Many have wondered. A report out this month could help young people make a more informed judgement. Hidden Talents, a report by the Centre for Economic & Social Inclusion, is a “skills mismatch analysis”. It very conveniently compares FE and skills achievements with the number of current jobs in the relevant occupations and the estimated new vacancies.

There are limits to the data, and precise figures should be treated with caution, warn the researchers. But in general, they say:

At a national level, there are significantly fewer jobs / vacancies per skills achievement in the creative industries; hair & beauty; and hospitality, leisure, travel & tourism. This suggests that these sectors have an over-supply of training. There are significantly more jobs / vacancies per skills achievement in marketing & sales; supporting teaching & learning in schools; security industries; and fashion & textiles. This suggests that these sectors have an under-supply of training.

They put the data for 16 to 18 year olds in a colour-coded table, where red indicates a relatively low number of jobs per skills achievement. Green indicates a relatively high number of jobs. Yellow is average:

Hidden Talents: Skills mismatch analysis, by Laura Gardiner and Tony Wilson, is downloadable from the Centre for Economic & Social Inclusion.


No one is owed a living

A speech today by Prime Minister David Cameron on welfare benefits has triggered concern for young people. While the proposals are vague and poorly-defined, they seem to signal an intent to reduce benefits for young people. For instance, they propose denying housing benefit to anyone under 25 – with the possible exception of care leavers and victims of domestic violence. The theme was “no one is owed a living”.

How can young people, and those who work with them, respond in such a climate. Here are some quick thoughts:

  • Don’t waste too much energy or thought on the current discussions. They are about political positioning. They may influence the Conservative party manifesto in the run-up to the next election. Or not. Either way they are currently a distraction from the changes that are already in the pipeline or happening.
  • Get advice on the rules for benefit entitlement. Rules are complex and changing. Find a good source of reliable local advice and build up relationships. This will be tougher than it once was. Welfare rights and advice services are fighting for their existence. So help them if you can.
  • Stay flexible, and keep abreast of changes as they happen. If you feel that you have been treated unfairly, considering appealing. Many decisions are reversed on appeal.
  • On the jobs market, be aware that not all training and education gives the same chance of getting a job. In general, the hair & beauty industry has a relatively low number of vacancies compared to those with skills to do them. So does hospitality, leisure, travel and tourism. And the creative and cultural industries. On the other hand, health & safety, fashion & textiles and marketing and sales have relatively high number of jobs for those skilled to do them.