Money Matters 2016

Money Matters

What is your understanding of Money Matters?

• Wages?– Income Tax, National Insurance, Tax Codes

• Bank Accounts?– Basic, Current, Savings

• Budgeting?– Incoming, Expenditure

• Credit?– Credit score, APR, loans

• Debt?– Arrears, fines, bankruptcy

IntroductionAims• Introduce you to Work Related Money Matters, and how they will effect you

– National Minimum wage and entitlement– Income Tax, rates and Tax Codes– National Insurance and classifications

• Identify the purpose of Banking Matters– Benefits of a bank account – Different types of bank accounts and the benefits of each

• Introduce you to Budgeting Matters– Identify different types of income and expenditure and where to prioritise spending– Demonstrate how to manage a budget

• Inform you of Credit and Debt matters– Understand what credit is and identify the different types of credit– The impact of credit score and how APR affects payments.– What happens when you are in debt and its impact on your spending

Objectives• Understand the reason for work related tax and national insurance• Understand different types of bank accounts• Develop knowledge of budgeting and the consequences • Begin the process of budgeting own income• Broaden you knowledge of credit and the impact of APR• Understand the consequences of debt and where to turn

Icebreaker

How much money is in the piggy bank?

Work Related Money Matters

National Minimum Wage

• The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law.

• It doesn’t matter how small an employer is, they still have to pay the minimum wage.

• The minimum wage rate depends on a worker’s age and if they’re an apprentice.

Further details available at www.gov.uk

Entitled to the Minimum Wage• Workers must be of school leaving age (last

Friday in June of the school year they turn 16) or over to get the minimum wage.

• Contracts for payments below the minimum wage are not legally binding. The worker is still entitled to the minimum wage.


Not Entitled to Minimum WageWorkers not entitled are;

– volunteers– self-employed people– company directors– people on government work programme – Jobcentre Plus Work trial for 6 weeks – family/ residents living with employer e.g. au pairs, workers younger than school

leavers age – higher and further education students on a work placement up to 1 year– workers on government pre-apprenticeships schemes – people on the following European Union programmes: Leonardo da Vinci, Youth in

Action, Erasmus, Comenius – members of the armed forces – share fishermen – prisoners – people living and working in a religious community


National Minimum Wage RatesYear 21 and over 18 to 20 Under 18 Apprentice*

2015 (current rate) £6.70 £5.30 £3.87 £3.30

2014 £6.50 £5.13 £3.79 £2.73

2013 £6.31 £5.03 £3.72 £2.68

2012 £6.19 £4.98 £3.68 £2.65

2011 £6.08 £4.98 £3.68 £2.60

*This rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age. National living wageThe current rates apply from October 2015.From April 2016, the national living wage will be £7.20 an hour for workers aged 25 and older. The minimum wage will still apply for workers aged 24 and under.

Income TaxIncome Tax is a tax you pay on your income. You don’t have to pay tax on all types of income.You pay tax on things like:• money you earn from employment• profits you make if you’re self-employed• some state benefits • most pensions, including state pensions, company and personal pensions and retirement annuities• interest on savings and pensioner bonds• rental income (unless you’re a live-in landlord and get £4,250 or less)• benefits you get from your job, e.g. bonuses, commission • income from a trust• dividends from company shares

You don’t pay tax on things like:• income from tax-exempt accounts, like Individual Savings Accounts (ISAs) and National Savings Certificates• some state benefits • premium bond or National Lottery wins• the first £4,250 of rent you get from a lodger in your home


Income Tax RatesTax rate Taxable income above your Personal

Allowance

Basic rate 20% £0 to £31,865 Most people start paying basic rate tax on income over £10,000

Higher rate 40% £31,866 to £150,000 Most people start paying higher rate tax on income over £41,865

Additional rate 45% Over £150,000

ExampleYou have £35,000 of taxable income and your Personal Allowance is £10,000. You pay basic rate tax at 20% on £25,000 (£35,000 minus £10,000).


Tax CodeYour employer or pension provider uses your tax code to work out how much tax to take from your pay or pension.

HM Revenue and Customs (HMRC) works out your tax code and sends it to your employer or pension provider.

Usually a tax code is several numbers and a letter. • Most people born after 5 April 1948 with one job have 1060L as their tax code for

the 2015 to 2016 tax year.

Tell HMRC if you think you’re paying too much or too little tax. If HMRC agrees they’ll adjust your tax code so that you:

• get your full tax-free Personal Allowance • pay the right amount of tax for all of your income, spread over a year


National InsuranceYou pay National Insurance contributions to qualify for certain benefits including the State Pension.You pay National Insurance if you are:• 16 or over• an employee earning above £153 a week • self employed and making a profit over £5,885 a year (unless you get an exception) The exact amount you pay depends on:• how much you earn• whether you’re employed or self-employed You may also want to pay voluntary contributions to make up for gaps in your National Insurance record. For example, you can have a gap because you weren’t working and didn’t get any state benefits.


National InsuranceNational Insurance class Who pays

Class 1 Employees earning more than £155 a week and under state pension age - they’re automatically deducted by your employer

Class 1A or 1B Employers pay these directly themselves on their employee’s expenses or benefits

Class 2 Self-employed people - you don’t have to pay if you earn less than £5,965 or choose to pay voluntary contributions

Class 3 Voluntary contributions - you can pay them to fill or avoid gaps in your National Insurance record

Class 4 Self-employed people earning profits over £7,956


HMRC Tax CalculatorIf your gross pay per year is £15,000.00For the 2014-15 tax year HMRC Tax Calculator estimated the following:

Per week Per month Per year

Gross pay £288.46 £1,250.00 £15,000.00

Income Tax £19.20 £83.18 £998.20

National Insurance £16.26 £70.44 £845.28

Total deductions £35.46 £153.62 £1,843.48

Your take home pay £253.00 £1,096.38 £13,156.52

Employer National Insurance £18.69 £81.01 £972.12

www.hmrc.gov.ukhttps://www.gov.uk/check-income-tax

http://www.hmrc.gov.uk/

Banking Matters

Where to Keep Your MoneyAn Israeli woman's decision to keep her life

savings in her mattress must have seemed like a wise one. But it came back to haunt her when her daughter threw the mattress out – along with $1m

(£611,000) stuffed into the lining.

What is a bank account?How can bank accounts be useful?

A facility to help you manage your everyday

money

Access own money easily

and safely

Requirement by employer?

To pay bills regularly/easily

and avoid getting into debt

Receive benefits, as well as money from

friends and family

Save money

Pay bills

Store money safely

Budget money Cash cheques

A healthy account can help us access other

financial products/services

Earn money

Bank Accounts• Basic Bank Account

– NO overdraft facility – but a buffer zone.– NO interest on in-credit balances.– Some allow online banking/telephone banking– Most will allow Standing Orders and Direct Debits to be set up– Some will allow a debit card– Most will allow a cash card

• Current Account– Overdraft available on request, dependent on credit score.– Interest paid on credit balance and charged on debt– Incentives for new customers e.g. student accounts.– Online banking apps/telephone banking– will allow Standing Orders and Direct Debits

• Savings Account– High variable/fixed rate interest paid on balance – Some are limited access or have restrictions e.g. ISAs, fixed rate bonds– Will not allow Standing Orders and Direct Debits to be set up– No debit/cash card– NO overdraft facility

Young Person Bank Accounts

Bank Age Range

D Debit/ S Orders

Debit Card

Cash Card

Interest Rate

Internet Banking

Mobile Banking

Evidence needed Contact Details

Royal Bank of Scotland Manchester City

16-18 Yes Visa Debit

Yes 2.5% Yes Yes Two forms of ID such as your UK birth certificate or passport and one proof of address.

4 Cross Street, City Centre, Manchester M2 7AE Tel:0161 839 2210 Website www.rbs.co.uk

Lloyds Bank Under 19s Northenden


Yes 2.5% Yes Yes Two forms of ID, such as passport or birth certificate, as well as proof of the parents identity and address are required.

332 Palatine Road, Northenden Manchester, M22 4HE Tel: 0845 3000 000 Fax: 0121 7423668 www.lloydsbank.co.uk

TSB Under 19s Wythenshawe


Yes 2.5% Yes Yes Two forms of ID, such as passport or birth certificate, as well as proof of the parents identity and address are required.

Hale Top, Wythenshawe, Manchester, Greater Manchester M22 5TS Tel:0845 975 8758 www.tsb.co.uk

Santander Youth Didsbury


Yes 3.0% Yes Yes Residency in the UK Full-time Education or starting a job ID such as your UK birth certificate or passport and one proof of address.

712-716, Wilmslow Rd Postcode: M20 6DQ www.santander.co.uk

Halifax Cash Card Wythenshawe


Yes 1.5% Yes Yes Online application requires personal info and postcode You will later need to bring two forms of ID, such as passport or birth certificate and proof of your address.

Hale Top, Wythenshawe, Manchester,M22 5RB Tel: 0161 9119563 Apply online www.halifax.co.uk/ Or call 08457 20 30 40

Nationwide Flexi youth Sale


Yes 0% Yes Yes Online application decision in 10mins requires personal info and postcode. You will later need to bring two forms of ID and proof of your address.

6 Market Walk, Town Square Sale, M33 7UH Tel: 0845 2660714 Apply online www.nationwide.co.uk

Young Person Account Northenden

16-19 Yes Visa Yes 0% Yes Yes Two forms of ID such as your UK birth certificate or passport and one proof of address

402 Palatine Road Northenden, Manchester M22 4FZ Tel: (08457) 555 555 www.barclays.co.uk

Adapt Account Northenden

11-18 Yes Visa Yes 1% Yes Yes Residency in the UK, Two forms of ID such as your UK birth certificate or passport and one proof of address. Instant online account with card and UK passport

2 Church Road, Northenden, M22 4NE Tel: 08457 888 444 www.natwest.com

Student Bank Accounts

To open a student bank account you’ll usually need a UCAS confirmation letter with either a conditional or unconditional offer and at least 2 forms of Identification (check Bank websites for more information) AER= Annual Equivalent rate. This is the official rate for savings accounts and is designed to show you'd get over a year if you put money in the account and left it there.

Bank Debit Card

In-credit Interest

Internet Banking

Mobile Banking

Overdraft Freebies/offers

Visa Debit None Yes Yes Year 1 = £1,400 Year 2 = £1,700 Year 3+ = £2,000

Boasts high ratings in customer satisfaction polls for customer service. Co-op also offer a 24 hour UK customer call centre service.

Visa Debit 0% Yes Yes Year 1=£500 for the first 6 months, £1,000 in months 7-9 and £1,500 after that. Year 2=Up to £1,500 Year 3=Up to £1,500

Years 4+5 = Up to £2,000

Three-year NUS Extra Card (if account is open before 31 Oct 2013 and you apply for NUS Extra Card before 31 Dec 2013). Worth £36. One-off £75 discount on STA holiday.

Visa Debit 1.5% above base rate on balances up to £1,000 (in 1st year only). 0% on all other balances.

Yes Yes Year 1 = £500 on opening. Then up to £3,000.

Year 2= Up to £3,000

Year 3+= Up to £3,000

For first-year students only, 18 free album downloads from Sony over 3 years. Must open account before 31 Oct 2013. If you are 18 or over, you can apply for a Student Credit Card with a credit limit of up to £500. Subject to status and account conduct.

Visa Debit 1%AER On first £500

Yes Yes You'll automatically get a £250 overdraft when you open the account, then up to £1,500 in years one to three if you make the £500/term pay-in. It goes up to £2,000 in year five.

Student Current Account holders who pay in £500/term a four-year receive a 16-25 Railcard, which normally costs £120, and gives a third off most rail journeys.

Visa Debit 0.1%AER Yes Yes The Halifax student account gives overdraft limits of 'up to' £3,000, though only the first £1,000 is guaranteed - the rest's decided on a case-by-case basis. You can ask for increases from what you're given but won’t automatically be granted this.

24/7 telephone banking service. Personalized ‘photo’ debit card.

Visa Debit 2%AER Yes Yes Year 1= £1,000 tiered by term, £500 limit in first term, £750 limit in second term and £1,000 in third term. Year 2 = up to £1,250, Year 3= up to £1,500.

Free 12-month Tastecard, giving 2for1 or 50% off meals out, worth £80.

Budgeting Matters

How much do you spend?

24 Hour Recall• Think back 24 hours • What have you done during that time? • More importantly, how much money did you

spend?

Take a moment and write down EVERY PENNY you spent

Managing Money• Why is it important to know how much money we have?

– To pay bills, buy food and buy new items– To have enough money until your next payment

• How can we manage our money?– Plan ahead and save – Budget to spread the cost– Set targets for large items

• What happens if we do not manage our money?– No funds until next payment– Fall behind in payments – Bailiffs may collect items– May lose your home

Income• Wages• Benefits• Savings• Student funds• Sales• Investments

Expenditure• Rent• Utility Bills• Travel• Tax & National Insurance• Food• Clothing• Telephone• Entertainment

Budgeting Sheet• Manage your expenses• Shows you how much

money you have spare• Spreads your spending• Stops you going into

debt• Helps you save for big

items such as a Holiday, Car, Home

Prioritising Expenses

Important Expenses• Mortgage/Rent• Council Tax• Tax• TV Licence• Food• Fuel Bills• Travel

Less Important Expenses• Telephone• TV packages• Tobacco• Nights out• Eating Out• Clothing • Holidays• Savings

Credit & Debt Matters

Credit MattersIn pairs name as many types of credit you can.Watch the clip to see http://www.capitalone.co.uk/creditmadeclearer/what-is-credit.jsf

• Credit is any arrangement where you buy goods or services now but you agree to pay later. – E.g. credit card, loan, overdraft, mortgage

• Creditors charge you interest on top of the funds you borrow.• To apply for credit you will need a good credit score.

Credit ScoreYour circumstances will effect your score,• Work or unemployed• Missed payments• Number of credit applied • You can check your credit score at http://www.equifax.co.uk/

http://www.capitalone.co.uk/creditmadeclearer/what-is-credit.jsf

http://www.equifax.co.uk/

Annual Percentage Rate• APR is how much your borrowing will cost over the period of an average

year, over the term of your debt.

• APR is a term you will see on lending products, including mortgages, overdrafts, credit cards and loans.

• It is a legal requirement for APR to be shown on products where you borrow money so you can compare rates.

• There's two types of APR: – Personal APR, is the rate you will pay this will be the same as the advertised APR – Representative APR, a minimum percentage a customer might pay . This may

change if you have a poor credit score

AnswersHigh Street Bank 21.4% every £100 you pay £111.97Post Office 13.9% every £100 you pay £107.69Building Society 8.6%-20% every £100 you pay £104.50 -111.16Provident 272% every £100 you pay £297.64Brighthouse 29.9% every £100 you pay £116.93Pawn Shop 19.9-29.9% every £100 you pay £111.10 - 116.93Payday Loan 1727% every £100 you pay £1,727.04Social Fund 0% every £100 you pay £100Online Loan 4214% every £100 you pay £4,214.00Credit Union 8-26.8% every £100 you pay £104.39- 115.10Loan Shark Unlimited AS MUCH AS THEY WANT

Write down as many words as you can linked to DebtFrustration Isolation StressFear Anger PressureAnguish Strain AnxietySeparation Loneliness DistressAnnoyance Dread BurdenLoathing Hate DismayPanicHassle Heartache

Debt Matters

http://www.moneysavingexpert.com/loans/debt-help-plan


• Not creating a plan• Not creating a realistic plan• Using credit to pay credit• Hiding away and not opening letters.• Not communicating with creditors.• Not taking the time to access support.

Common Mistakes

What happens if you do not pay your…• Rent or Mortgage

– The lender or landlord will seek possession through court and you will lose your home• Court Fine

– The court will charge you bail and issue a warrant for your arrest and imprisonment• Council Tax

– Council will take you to court, charge you court fees & fines, – If you do not pay court fine, warrant, bail costs and imprisonment

• TV Licence– TV Licence will take you to court, charge you court fees & fines – If you do not pay court fine, warrant, bail costs and imprisonment

• Fuel Bill– Charged late fees, supply cut off and court proceedings for outstanding balance and court fees

• Water rates– Charged late fees and court proceedings for outstanding balance and court fees

• Loan/Finance/Credit Card/Overdraft– Charged late fees and court proceedings for outstanding balance and court fees– Seizure of goods through bailiffs

• Road Tax/insurance– Court proceedings, seizure of car through Police, car crushed

• Tax Bill– Council will take you to court, charge you court fees & fines, – If you do not pay court fine, warrant, bail costs and imprisonment

• Step Change Debt Charity (formerly Consumer credit counselling service CCCS)

• National Debt line 0808 808 4000.

• Debt Support Trust Manchester

• Local Citizen Advice Bureau

• Martin Lewis Money saving expert website

Organisations who can help

http://www.stepchange.org/

https://www.nationaldebtline.org/

https://www.nationaldebtline.org/

http://www.debtsupporttrust.org.uk/debt-advice/debt-help-in-manchester

http://www.citizensadvice.org.uk/


ANY QUESTIONS?

EvaluationAims• Introduce you to Work Related Money Matters, and how they will effect you

– National Minimum wage and entitlement– Income Tax, rates and Tax Codes– National Insurance and classifications

• Identify the purpose of Banking Matters– Benefits of a bank account – Different types of bank accounts and the benefits of Basic, Current, Savings accounts

• Introduce you to Budgeting Matters– Identify different types of income and expenditure and where to prioritise spending– Demonstrate how to manage a budget

• Inform you of Credit and Debt matters– Understand what credit is and identify the different types of credit– The impact of credit score and how APR affects payments.– What happens when you are in debt and its impact on your spending

Objectives• Understand the reason for work related tax and national insurance• Understand different types of bank accounts• Develop knowledge of budgeting and the consequences • Begin the process of budgeting own income• Broaden you knowledge of credit and the impact of APR• Understand the consequences of debt and where to turn

Finally…

How much money is in the piggy bank?

£

If you having financial difficulties please book an appointment at reception to see the

Guidance and Welfare Team