#Talk Money Practitioner Workshop - Money Management
David Mahon Citizens Advice|@CitizensAdvice
@FinCapStrategy #TalkMoney|#FinCap17
Objectives for this workshop
U S
• 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
Our approach today
Evidence
Experience
Example
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?
The Financial Capability Model
Current Wellbeing
Longer term financial security
F I N A N C I A L W E L L B E I N G
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 C A P A B L E B E H A V I O U R S
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
Considered spending
Ability
Financial numeracy
Connection
Digital engagement Financial engagement
FINANCIAL MEANS
FINANCIAL PRESURES
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
New modelling allows us to identify consumers with different needs
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.
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.
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.
Over-confident
27%
11.1m working-age people in the UK
Self-assured
48%
19.7m working-age people in the UK
Overwhelmed
18%
7.4m working-age people in the UK
Need a confidence boost
7%
2.9m working-age people in the UK
Higher Confidence
Lower Confidence
Higher Numeracy
Lower Numeracy
Source: Adult numeracy and financial capability, November 2017
The Skill/ Will ModelHigher Will
(Confidence and engagement)
Lower Will(Confidence and engagement)
Higher Skill / (Knowledge, ability and mind-set)
Lower Skill / (Knowledge, ability and mind-set)
• Teach and train
• Reduce risk
• Manage constraints and obstacles
• Provide tools
• Give ongoing guidance
• Coaching to explain
G U I D E• 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 specific directions and clear explanations
• Identify motives
• Develop vision of success
• Structure quick wins
• Train and coach patiently
• Provide frequent feedback and close supervision
D I R E C T• 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
Source: Adapted from Situation Theory by Kenneth Blanchard and Paul Hersey
Our clients
Which Step Have You Reached Today?
Our Goal
I won’t do it
I can’t do it
I want to do it
How do I do it?
I’ll try to do it
I can do it
I will do it
BackgroundDivide into 3 groups based on summary score of Active saver, Manages credit and Keeps track
composites:
Look for what specific behaviours and
enablers/inhibitors move people from:
Top 25%
Middle 50%
Lowest 25%
For two people in the same financial situation (i.e.
tenure, income, work status, age, social grade, sub-
segment etc.)
Source: Managing money well day to day (budgeting)Deep dive
▪ Middle 50% to Top 25%
▪ What moves someone up the middle 50%
▪ Lowest 25% to Middle 50%
Managing least well
Middle
Improving day to day management
Confidence and self efficacy
Engage more actively –think in terms of pots of
money
Be more averse to using credit
Develop saving mindset & save regular amount
Engagement and attitudes
Managing best
Considered spending
Seek money advice / compare products
Non-impulsive spending
Develop saving mindset & save regular amount
Source: Managing money well day to day (budgeting)Deep dive
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
Budgeting techniques
Ideas and examples
What things work for you? What examples should be added
At a glance…..
■ 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
How much is my weekly shop?
• Set up direct debits and standing orders for payday
• Set up a separate bills account
• Use cash• Check balances• Keep a spending
diary
• Keep a separate pot for these or use your separate account
• Set up a standing order to transfer an amount to save
Easy:3 actions not 50+
salience:personalised
Similar others:tips passed on from previous clients
Budget Summary – Page 1
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
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 timeMake money last until
paydaySave for expected
one-off costs
10
Commitment:checklist
Commitment:active
Salience:PersonalisedMeaningful spending breakdown
Budget Summary – Page 2
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
The average % uplift in payments made on
time is 9%
Your individual payments, costs and saving guide
How behaviour change works
EASY
SOCIAL
EAST: Four Simple Ways to Apply Behavioural Insights www.behaviouralinsights.co.uk/publications/east-four-simple-ways-to-apply-behavioural-insights/
ATTRACTIVE
TIMELY
Make it Easy
Start small
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%.
Form the habit
Provide help / tips
I hated making packed lunches at first and now I am into the swing of things it
has just become part of my day.
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.
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%. It’s just been having somebody sitting and
saying “you need to save this” and that’s been useful
A challenge,not a chore
Push to getstarted
I think it should be described as a challenge, something to aim for, targets
to beat and complete, this sounds exciting and fun.
Make it Social
Do ittogether
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.
I’ve taken this savings challenge so I’m determined to do as well as I can with it
I’ve been really motivated, from the point of view of the whole competitive thing.
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.
Thankfully because of this project we already had the money for the vet’s bill
Show progreess
Make the gains tangible
You can see the progress which motivates you to achieve your end goal.
Success Factors
EASY
SOCIAL
ATTRACTIVE
TIMELY
▪ Start small
▪ Form the habit▪ Provide help/tips
▪ A challenge, not a chore
▪ Push to get started
▪ Do it together
▪ Show progress
▪ Make the gains tangible
Visualising / anchoring – you are more likely
to do something if you visualise yourself
doing it – i.e. behavioural rehearsal
People are more inclined to act if things cost
them money rather than if things save them
money
People will repeat things that drive a
positive outcome (e.g. money management
means I can give my family a small treat)
An emotional trigger to achieving a goal
(e.g. children; a positive life event e.g.
wedding)
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
Three steps to make change
Understand the Issue
Identify opportunities
Decide actions
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
Thank you
www.fincap.org.uk@FinCapStrategy #TalkMoney|#FinCap17