#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