#Talk Money Practitioner Workshop - Money Management

Transcription

1 #Talk Money Practitioner Workshop - Money Management David Mahon #TalkMoney #FinCap17

2 Objectives for this workshop US To share knowledge and experience of the different needs and attitudes of clients when it comes money management To be able to explore evidence (from MAS) and experience (from us) with regards to money management To be able to share best practice that increases motivation to act and change behaviour Skills and Knowledge Habit and Behaviour O U R C L I E N T S To explain and train how to manage money more effectively To change behaviours and move from intention to reality

3 Our approach today Experience Example Evidence

4 Confidence line How confident are you to support and guide your clients to understand how to manage money more effectively? How confident are you to change the behaviours and habits of your clients and move them from intention to reality?

5 The Financial Capability Model F I N A N C I A L W E L L B E I N G Current Wellbeing Longer term financial security FINANCIAL MEANS F I N A N C I A L C A P A B L E B E H A V I O U R S FINANCIAL PRESURES Managing money well day-to-day Managing credit use Active saving Keeping track Managing and preparing for life events Building resilience Working towards goals F I N A N C I A L E N A B L E R S & I N H I B I T O R S Mindset Savings mindset Financial confidence Ability Financial numeracy Connection Considered spending Digital engagement Financial engagement Source: Measuring financial capability identifying the building blocks: Understanding what drives or inhibits consumers financial wellbeing and resilience - An in-depth analysis of the UK November 2016

6 New modelling allows us to identify consumers with different needs The over-confident group comprises those scoring 0-6 for numeracy (Poor and Low numeracy) and 7-10 for confidence in using numbers. This represents more than a quarter of working-age adults in the UK. Whilst in general this group does better than those with similar numeracy but lower confidence, there are some areas where over-confidence may be putting them at risk of worse financial outcomes. Lower Numeracy The overwhelmed comprises those scoring 0-6 for numeracy (Poor and Low numeracy) and 0-6 for confidence in using numbers and represents around 1 in 5 of working-age adults in the UK. This is the group that struggles the most with financial capability, which, when compared with the Over-confident who also have lower levels of numeracy, confirms the positive effect that confidence can have. Over-confident 27% 11.1m working-age people in the UK Overwhelmed 18% 7.4m working-age people in the UK Higher Confidence Lower Confidence Self-assured 48% 19.7m working-age people in the UK Need a confidence boost 7% 2.9m working-age people in the UK Higher Numeracy The self-assured group comprises those scoring 7-10 for numeracy (Moderate and High numeracy) and 7-10 for confidence in using numbers. Nearly half of working-age adults in the UK (48%) fall into this category. They may still have some numeracy issues but they are doing the best of the four quadrants in terms of financial capability outcomes. The need a confidence boost group comprises those scoring 7-10 for numeracy (Moderate and High numeracy) and 0-6 for confidence in using numbers. This is the smallest quadrant only representing 7% of working-age adults who, whilst they have the numeracy skills to have good financial outcomes, may need to have their confidence boosted, as they do not do as well as the Self-assured. Source: Adult numeracy and financial capability, November 2017

7 The Skill/ Will Model Higher Will (Confidence and engagement) Lower Skill / (Knowledge, ability and mind-set) Teach and train Reduce risk Manage constraints and obstacles Provide tools G U I D E Give ongoing guidance Coaching to explain D I R E C T Give specific directions and clear explanations Identify motives Develop vision of success Structure quick wins Train and coach patiently Provide frequent feedback and close supervision Communicate trust and recognition Develop stretching goals Set objectives but not method Broaden responsibilities Collaborate on decisions Don t over manage E M P O W E R Give something to get excited about vision or goal Identify reason for low confidence/ will Develop intrinsic motivation incentives Monitor and provide recognition Reinforce positive behaviours Encourage M O T I V AT E Higher Skill / (Knowledge, ability and mind-set) Lower Will (Confidence and engagement) Source: Adapted from Situation Theory by Kenneth Blanchard and Paul Hersey

8 Our clients

9 Our Goal Which Step Have You Reached Today? I will do it I can do it I ll try to do it How do I do it? I want to do it I can t do it I won t do it

10 Background Divide into 3 groups based on summary score of Active saver, Manages credit and Keeps track composites: Top 25% Look for what specific behaviours and enablers/inhibitors move people from: Middle 50% to Top 25% Middle 50% What moves someone up the middle 50% Lowest 25% Lowest 25% to Middle 50% For two people in the same financial situation (i.e. tenure, income, work status, age, social grade, subsegment etc.) Source: Managing money well day to day (budgeting) Deep dive

11 Improving day to day management Managing least well Middle Managing best Engagement and attitudes Engage more actively think in terms of pots of money Develop saving mindset & save regular amount Be more averse to using credit Confidence and self efficacy Considered spending Seek money advice / compare products Non-impulsive spending Develop saving mindset & save regular amount Budgeting techniques Don t just keep track in your head this isn t enough on its own Careful use of credit not using short term credit Self efficacy Source: Managing money well day to day (budgeting) Deep dive

12 Ideas and examples What things work for you? What examples should be added

13 At a glance.. How much is my weekly shop? High volume of information extracted from clients Presented in a way that goes against the grain of normal human behavior (50+ lines of data, all spends PCM) Under used as a practical guide to money management

14 Budget Summary Page 1 Easy: 3 actions not 50+ To pay for regular payments you need 1,615 / month To pay for everyday expenses you need 681 / month To save for expected one-off costs you need 381 / month salience: personalised Your regular payments: Mortgage Car finance Child care Your IVA payment ( 177) Your everyday spends: Food Petrol Lunch money / school meals Your one off costs: MOT/Tax/Car repairs School uniform/clothing Christmas/birthdays Dental/medical costs Pay bills on time Set up direct debits and standing orders for payday Set up a separate bills account Make money last until payday Use cash Check balances Keep a spending diary Similar others: tips passed on from previous clients Save for expected one-off costs Keep a separate pot for these or use your separate account Set up a standing order to transfer an amount to save

15 Budget Summary Page 2 Your individual payments, costs and saving guide Commitment: checklist Commitment: active Pilot clients maintain consistently higher payment rates over the first 6 months There was a 33% reduction in preventable non payment reasons in the pilot group 10 Salience: Personalised Meaningful spending breakdown The average % uplift in payments made on time is 9%

16 How behaviour change works EASY ATTRACTIVE SOCIAL TIMELY EAST: Four Simple Ways to Apply Behavioural Insights

17 Make it Easy Start small Provide help / tips It is amazing at how making small changes can lead to big savings. You really can achieve an awful lot if you make small adjustments. I hated making packed lunches at first and now I am into the swing of things it has just become part of my day. Form the habit I didn t think about [selling old mobile phones] before as a saving, but I would definitely go ahead and do that Example: Auto-enrolment into pension schemes In the first six months after employees in large firms were automatically enrolled into pension schemes, participation rates rose from 61 to 83%.

18 Make it Attractive Example: Drawing the attention of those who fail to pay road tax When letters to non-payers of car tax included a picture of the offending vehicle, payment rates rose from 40 to 49%. I think it should be described as a challenge, something to aim for, targets to beat and complete, this sounds exciting and fun. Push to get started A challenge, not a chore It s just been having somebody sitting and saying you need to save this and that s been useful

19 Make it Social I ve been really motivated, from the point of view of the whole competitive thing. Do it together I ve taken this savings challenge so I m determined to do as well as I can with it Example: Using social norms to increase tax payments When people were told in letters from HMRC that most people pay their tax on time, it increased significantly payment rates. The most successful message led to a 5 percentage point increase in payments.

20 Make it Timely Example: Increasing payment rates through text messages Prompting those owing Courts Service fines with a text message 10 days before the bailiffs are to be sent to a person s home doubles the value of payments made, without the need for further intervention. You can see the progress which motivates you to achieve your end goal. Make the gains tangible Show progreess Thankfully because of this project we already had the money for the vet s bill

21 Success Factors EASY Start small Form the habit Provide help/tips Visualising / anchoring you are more likely to do something if you visualise yourself doing it i.e. behavioural rehearsal ATTRACTIVE A challenge, not a chore Push to get started People are more inclined to act if things cost them money rather than if things save them money SOCIAL Do it together People will repeat things that drive a positive outcome (e.g. money management means I can give my family a small treat) TIMELY Show progress Make the gains tangible An emotional trigger to achieving a goal (e.g. children; a positive life event e.g. wedding)

22 Ideas exchange Think about the things you are doing that work Refer to the handout sheet Discuss in your groups Write down one idea per post-it note Discuss if this is Easy, Attractive, Social or Timely and add the first letter the post-it Write on it which element of day to day money management it is targeting Place the post-it under the correct heading on the poster

23 Three steps to make change Decide actions Identify opportunities Understand the Issue

24 Activity In small groups, discuss the techniques you will use based on what you now know What one take away you have had as a result of today Please complete a commitment card and share with a colleague

25 Thank you #TalkMoney #FinCap17