MONEY MATTERS A RESOURCE TO SUPPORT YOUNG PEOPLE (11-19) WITH FINANCIAL CAPABILITY ??????????? ????????????????? SAVIN UTILITY BILL CALCULATOR BUDGET

Transcription

1 200 BUDGET CALCULATOR NATIONAL INSURANCE CREDIT CARD?????????????????????? MONEY MATTERS???????????????????????????? SAVIN MINIMUM WAGE 5 UTILITY BILL COUNCIL TAX COLLECT FINANCIAL CAPABILITY AS YOU PASS MORTGAGE 300 PAY A RESOURCE TO SUPPORT YOUNG PEOPLE (11-19) WITH FINANCIAL CAPABILITY

2 5 BILL CO TAX COLLECT FINANCIAL CAPABILITY AS YOU PASS MORTGAGE 300 PAY Contents Background...3 Activity 1: Needs and Wants...4 Activity 2: Financial Definitions...8 Activity 3: Looking at Payslips Activity 4: How Much Does it Cost?...22 Activity 5: Taking Risks

3 Background What is financial capability? Developing financial capability is about giving young people the skills, knowledge and confidence to make their own informed financial decisions and choices. A financially capable person will be able to: understand commonly used financial terms explore personal attitudes and values towards money consider the implications of financial decisions and their consequences use basic budgeting skills. Why is financial capability important for young people? Financial capability is becoming more important as young people are faced with increasingly complex financial decisions. The flexible labour market, lifelong learning, short term contracts, and greater longevity all have serious implications for how we undertake financial planning. Financial choices and decisions will have significant consequences for future financial well-being. Financial capability is an important life skill for everyone, not just young people. The ability to make well informed financial decisions is the key to identifying and making best use of the opportunities in today s changing world. About this resource This resource is intended to support professionals who work with young people in schools or informal settings such as youth groups and children s centres. It aims to give suggestions for activities that can be used to help young people reflect upon their attitudes towards money and how they spend, save and use money in their lives. This resource aims to help young people to acquire the knowledge, skills and attitudes to make informed choices for present and future decisions. Creating a safe, secure and supportive learning environment It is important to create a safe, secure and supportive learning environment where young people s questions and concerns can be sensitively addressed. Due to the sensitive and emotional nature of the topic, it is advisable to establish ground rules which cover issues such as young people s right to privacy and respect. Young people should be encouraged to speak openly and feel assured that personal information should not be discussed outside of the session without consent. Finding out what young people already know Before embarking on any financial capability work with young people, it is a good practice to find out what the young people already know and understand. For example, this can be achieved through mind mapping their existing knowledge of key financial terms and knowledge. These mind maps can also be used to assess the young people s understanding at the end of financial capability sessions. 3

4 ACTIVITY 1 Needs and Wants 4

5 AIM To reflect on the needs and wants young people have in order to live a healthy and well balanced life. INSTRUCTIONS Look through the Needs and Wants resource cards with the young people. Ask them to consider the relative importance of these items. It is best to allow them to work on their own as their responses will all be different. Give the young people time to place the cards on Activity Sheet 1 according to whether they consider them to be a Need or a Want. This activity does not have any right or wrong answers and it is not intended to be judgemental. It is intended to allow the young people to see how they currently pay for things or intend to in the future. QUESTIONS TO CONSIDER If you were older, would you arrange the cards differently? How would your parents/carers arrange the cards? Would your friends arrange the cards differently? RESOURCES Needs and Wants Activity Sheet Needs are items that are essential to health and well-being Wants are non-essential items, sometimes called luxuries Needs and Wants cards 5

6 Needs and Wants Activity Sheet Things I need Things I want 6

7 TV licence Council Tax House contents insurance Hairdressers/ Barber Satellite/TV subscription Newspaper/ magazines Car running costs, petrol, bus tickets Beauty treatments Family/ friends Broadband Socialising with friends Alcohol New clothes Computer gadgets/ games Transport costs Food Mortgage/ Rent/Board Utility bills Music and film downloads Toiletries Cigarettes Holidays Mobile phone Needs and Wants Cards % 7

8 ACTIVITY 2 Financial Definitions 8

9 AIM To gain an understanding of common financial terms. INSTRUCTIONS Look through the financial terms written on the definition cards. Ask the young people if they have heard of any of the terms. In groups, match the financial terms with their definitions. Place any financial terms or definitions that you are not sure of to one side. Explore the definitions and the implications for young people. Use the additional notes as well as your own knowledge to support the young people s understanding. QUESTIONS TO CONSIDER Which of the financial terms affect you the most? Which of the financial terms do not apply to you at the moment? What other financial terms have you heard of? RESOURCES Financial Definition Notes Financial Definition Cards Why we pay tax When people start working they do not keep all the money they earn. Some of it is deducted in tax. Tax is used by the government to pay for services that benefit everyone in the community. Tax pays for hospitals, the police, schools, rubbish collections etc. 9

10 Financial Definition Notes Mortgage When applying for a mortgage, you are assessed as to whether you are in a position to be able to pay back the mortgage. Most mortgages require an upfront deposit to be paid. Pension Everyone receives a basic state pension according to paid or credited National Insurance contributions. Pensions can be topped up with work place pensions where a percentage of your pay is put into a pension scheme automatically every payday. In most cases, employers and the government add money into your pension scheme. ISA (Individual Savings Account) You are allowed one ISA and have an annual cash limit you can save. ISAs are a good way of saving money without any risk. Will Many people do not have a will. If you die without a will, the law decides who gets your property and assets. Wills need to be formally witnessed and signed to be made legally valid. APR (Annual Percentage Rate) The higher the APR the more interest that is charged. Very often the APR is included in the small print and is not always clear. Overdraft Going overdrawn means that your bank balance goes below zero. Many banks charge for going overdrawn and the period that you are overdrawn unless there is an agreement between you and the bank. Debit Card A debit card is a plastic payment card that provides the cardholder electronic access to their bank account. The card, where accepted, can be used instead of cash when making purchases. Payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of them paying the money back at a later date. Credit Card A credit card allows the cardholder to pay for goods and services based on the holder's promise to pay for them. In order to get a credit card, young people have to build up a credit history to show that they are able to pay back money. This can be difficult for young people. Further more if you do not pay back the minimum amount of a monthly balance then you are charged interest. Current Account The age at which you can open a bank or building society account varies according to the rules of the particular bank. Most banks have special accounts for children and young people. You can borrow money 10

11 Financial Definition Notes or ask for an overdraft while you are under 18 but since you are not legally responsible for your debts, it may be difficult to find a lender without someone (guarantor) who agrees to pay the money back if you fail to do so. VAT (Value Added Tax) There are exemptions to goods and services that VAT applies to. Goods and services such as food and drink, sporting activities, books, utility bills, magazines, baby s and children s clothing are all exempt. Council Tax Council tax is calculated according to the band that your house is valued at and where you live in the country. You can get discounts to your council tax bill according to whether you receive welfare benefits or if you live on your own. for people under 18, between 18-20, apprenticeships and over 21. National Insurance National Insurance (NI) is a system of contributions paid by workers and employers towards the cost of certain state benefits such as pensions, unemployment benefits, sickness pay, maternity leave etc. Rent When renting a house or flat, you normally have to pay utility bills and council tax. Reasonable repairs to the house or flat are normally carried out by the landlord. This will be in you tenancy agreement. Minimum Wage The national minimum wage depends on your age. There are different rates of pay 11

12 Financial Definition Cards % Mortgage A long term loan taken out to cover a large part of the price of a house. Pension A fund that pays out to someone when they retire. People will have paid into the fund out of their wages during their working life. ISA Individual Savings Account A savings account which allows you to save money tax free. 12

13 Financial Definition Cards % Will A document in which you say who or what will inherit your possessions, money and property. APR Annual Percentage Rate This is the rate of interest charged on a loan or a credit card bill if you do not pay it off completely each month. Overdraft This is an agreement with a bank to spend more money than you actually have in your account. 13

14 Financial Definition Cards % Debit Card This is a card issued by a bank, which can be used instead of cash to purchase goods or services. The funds are drawn straight from your current account. It can also be used to withdraw cash. Credit Card A card that allows people to spend money. If you do not pay off the balance at the end of each month you are charged a high rate of interest. Current Account A bank account for day to day use. It will usually have a cheque book and debit card attached. 14

15 Financial Definition Cards % Tax This is the amount the Government takes from your income to pay for things such as health, education, defence etc. VAT Value Added Tax The tax on goods or services charged when you buy something. Council Tax This is the amount collected by local Government during the financial year from households in its area. It is used to pay for local services such as schools, police, rubbish collection etc. 15

16 Financial Definition Cards % Small print This is often part of a contract, insurance, credit card agreement, etc. It is literally small print in which companies set out their very detailed terms and conditions. Minimum wage This is the minimum amount a person of a particular age can be paid for any job. Salary The amount an employer pays you for your work across a year. 16

17 Financial Definition Cards National Insurance % This is a sum of money paid which contributes to your sick pay and State pension. Rent This is money paid to a local authority or private landlord for accommodation. 17

18 ACTIVITY 3 Looking at Payslips 18

19 AIM To understand what happens to the money you earn. INSTRUCTIONS Discuss how people who work receive payslips to show their earnings every week, month or fixed payment period. Share with the young people the model payslip on Payslip Activity Sheet. Use the coloured definition cards to highlight the different parts of the payslip and explore the different deductions made from a salary. QUESTIONS TO CONSIDER Who does Mr Andrew Smith work for? What is Andrew s tax code? How many hours does Andrew work? How much does Andrew earn per month? How much is paid to his bank? How much is his national insurance contribution per month? RESOURCES Payslip Activity Sheet Payslip Cards EXTENSION Examine other deductions that people have when they are paid. Such as union subscriptions and tuition fees. What things need to be paid for on a weekly, monthly and yearly basis (E.g. gas, electricity, water, insurance, council tax etc.)? Did you know? Your pay slip must show your earnings before and after any deductions, explain any deductions and show how your wage is paid. Your employer must explain any fixed deductions from your wage, e.g. trade union subscriptions. They must do this either on your pay slip, or in a separate written statement. You don t have the right to a pay slip if you re: not an employee, e.g. contractors or freelancers in the police service master or crew member working in share fishing (paid by a share in the profits or gross earnings of a fishing vessel) 19

20 Payslip Activity Sheet Payments Hours Rate Amount Deductions Amount Salary PAYE tax National Insurance Pension Holidays: Taken: 7.0 Remaining: 13.0 This Period Year to Date Mr Andrew Smith 14 Derby Road Belper Derbyshire Total Gross Pay Total Gross Pay TD Gross for Tax Gross for Tax TD Earnings for NI Tax paid TD Earnings for NI TD National Insurance TD Payment Period Monthly Pension TD (inc AVC) Payslipservice.com - for Payslips & P60 Dept: Sales Tax Code 603L TaxPeriod: 8 Payment Method: BACS Net Pay

21 Payslip Cards % Salary This is the amount you have earned before any deductions have been made. PAYE Tax PAYE or Income Tax is deducted straight from your wages by your employer. National Insurance You pay National Insurance to be entitled to certain state benefits, including the state pension, maternity leave etc. Pension A pension is a contribution you pay made during your working life so that you will receive a regular income when you retire. Net Pay This is the sum of money you will actually be paid at the end of the month (after all deductions have been made) on your pay day. Tax Code A tax code is used by your employer to calculate the amount of tax to deduct from your pay. If you have the wrong tax code you could end up paying too much or too little tax. 21

22 200 ACTIVITY 4 How Much Does it Cost? 22

23 AIM To create a balanced menu for a week on a budget. INSTRUCTIONS Using the Budgeting Cards from the activity sheet, plan as far as possible, a nutritiously balanced menu for a day or week. Remember that the food items sometimes have more than one serving so they can be used more than once. Use the serving suggestions on the cards as a guide to plan the menu. When a day or week s menu has been created, try working out how much the menu has cost. QUESTIONS TO CONSIDER Is the menu nutritious? How could the food bill be reduced or increased? Would the menu be enjoyable to eat? Would you be tempted to skip a meal to save money? RESOURCES Pen Record Sheet Budgeting Cards Calculator (optional) EXTENSION Tips for reducing food bills Take advantage of in store offers from supermarkets, but make sure you really need the item. Only buy what you are actually going to eat. A lot of food is thrown away or goes out of date. Try swapping premium named brands for own store brands. Freeze any unused food or buy bulk amounts of meat etc. that can be frozen and used at a later date. Use smaller plates thereby reducing portion sizes. Very often we eat more than we actually need. Look at other expenditures such as electricity, water, heating, council tax etc. 23

24 Record Sheet Breakfast Dinner Tea Cost Monday Tuesday Wednesday Thursday Friday Saturday Sunday Total cost for the week 24

25 Budgeting Cards Loaf of bread = 60p 2 slices of bread = 6p Servings per loaf o o o o o o o o o o Tin of beans = 33p ½ tin (serving) = 16p Servings per tin o o ½ dozen eggs = egg = 20p Servings per box o o o o o o Cheese = Portion = 31p Servings per block o o o o o o 4 jacket potatoes = 1.00 Each = 25p Servings per bag o o o o Chocolate Spread = Serving = 12p Servings per loaf o o o o o o o o o o Box Sugar Puffs = 2 1 Serving = 34p Servings per box o o o o o o Weetabix box = weetabix = 12p Servings per box o o o o o o o o o o o o 1 lt Milk = 89p 1 serving = 18p Servings per bottle o o o o o o o o o o 25

26 Budgeting Cards 1 can energy drink = 1.39 Servings per can o Orange juice carton = 65p 1 big glass = 13p Servings per carton o o o o o Water = Free Servings o o o o o o o o ½ cucumber = 40p 1 serving = 7p Servings per block o o o o o o Bag value pasta = 30p Serving = 6p Servings per bag o o o o o Tin tomatoes = 33p ½ tin = 16p Servings per tin o o Frozen mixed veg = 1 Serving = 10p Servings per box o o o o o o o o o o Tin sweetcorn = 33p ¼ serving = 8p Servings per tin o o o o Mars bar = 59p 1 serving = 18p Servings per bar o 26

27 Budgeting Cards 6 bananas = 1 1 banana = 16p Servings per bunch o o o o o o 6 apples = 1 1 apple = 16p Servings per bag o o o o o o 8 sausages = 1 2 sausages = 25p Servings per packet o o o o Tub margarine = 75p 1 serving = 3p Servings per block o o o o o o o o o o o o o o o o o o o o o o o Tin tuna = 54p ½ tin serving = 27p Servings per tin o o Packet of biscuits = 80p 1 biscuit = 7p Servings per packet o o o o o o o o o o o o 27

28 ACTIVITY 5 Taking Risks 28

29 AIM To assess the level of risk associated with different scenarios involving money. INSTRUCTIONS Give the young people a selection of the Scenario Cards. Ask the young people to think of the potential pros and cons to the different scenarios in the short and long term. Use the opportunity to discuss the consequences of the decisions people make. QUESTIONS TO CONSIDER How can you reduce some of the risks that are on the Scenario Cards? Because something is risky, does that make it wrong? How can some risk taking be positive? RESOURCES Scenario Cards Taking risks: Taking risks is an essential part of everyday life. Risk taking can be positive as well as negative. In financial terms, taking risks depends on the knowledge you have, the risk you are willing to take and weighing up the consequences of your actions. Additional Notes EXTENSION Look at other expenditures such as electricity, water, heating, council tax etc. 29

30 Scenario cards % Taking a payday loan to cover the cost of the rent or mortgage Buying a sofa from a hire purchase company Borrowing 100 from a loan shark to pay the electricity bill Spending 5 on the lottery Buying illegal alcohol or cigarettes Taking out a store card to receive a 15% discount Buying something on the internet 30

31 Additional Notes NOTES Taking a payday loan to cover the cost of the rent Pros You can get quick and easy access to money. Many banks will not give out small short term loans. Cons You have to pay extremely high interest rates on the loan if it is not paid back. You could get into a cycle of debt whereby you are constantly paying back more money in interest. Buying a sofa from a hire purchase company Pros You can buy a sofa quickly. Often you receive interest free credit. Cons Failure to keep to instalments will affect payments and incur further interest payments so in the long run the sofa will cost a lot more than the original price. Borrow 100 from a loan shark to pay the electricity bill Pros You can get quick access to money. Many banks will not give out small short term loans. Cons Loans are not legally binding and you have no rights. Loan sharks are not regulated. Interest rates are not always made clear. There is a risk of unwelcome visitors collecting money and using threats and violence to get money back. You can be encouraged to take out further loans. Spending 5 on the lottery Pros There is a chance of winning a lot of money. You are contributing to good causes. It can be fun and you can get a buzz from playing the lottery. Cons It is likely that you will not win any money. You could spend your money on something more useful or on essential items. You may be tempted to buy more tickets. Playing the lottery could encourage other forms of gambling. Buying illegal cigarettes Pros Illegal cigarettes can be cheaper than legal goods. Cons You may not know what is in them and this may cause long term health problems. You may be funding crime. It might not be safe where you buy them from. Knowingly buying illegal cigarettes is a criminal activity. Taking out a store card to receive a 15% discount Pros Reduces the cost of the item you want to buy. You can spread the payments over a longer period of time. You will find out and receive special offers from the store. Cons The discounts may encourage you to buy other things that you do not really want. If you do not keep up payments you will be charged high interest rates. Buying something on the internet Pros It can be easy and quick to buy things from the internet and they can often be cheaper. You do not have to go out to shops which can be useful at busy times such as Christmas. Cons The website you buy from might not be secure. You might buy things you do not really need as you do not see money actually exchanged. Goods you buy might not arrive or arrive late. 31

32 15 Website: A special thanks to pupils from Heritage High School Young Inspectors for modeling for the photographs in this resource. Designed and printed by North East Derbyshire District Council 5642