Introducing financial capability skills: A pilot study with Fairbridge West, Bristol. An evaluation report from the Personal Finance Research Centre, University of Bristol Adele Atkinson July, 2005 Acknowledgments This project was commissioned by Fairbridge West, Bristol. I would like to thank Frances Harrison and Debbie Sharp at Fairbridge for their continued advice and support. Thanks must also be extended to the various partner organisations and to Ruth Bradbrook, the project co-ordinator. Additionally, thank you to Professor Elaine Kempson for providing project management and a wealth of information about personal finance and financial capability. Sincere thanks are due to all the young people who contributed to this research. The evaluation would not have been possible without their cooperation. I have used their words wherever possible and I sincerely hope that I have reflected their views and experiences, knowledge and skills. However, I remain entirely responsible for the content of the report and any errors or omissions. Contents Contents ........................................................................................................................1 Executive Summary.....................................................................................................2 Introduction..................................................................................................................6 Fairbridge...................................................................................................................6 Partner organisations..................................................................................................8 Financial Capability...................................................................................................9 Young people nationally..........................................................................................11 Housing and Employment....................................................................................11 Basic skills and financial literacy ........................................................................11 Knowledge and awareness of financial services..................................................12 Section 1 ......................................................................................................................14 Methodology............................................................................................................14 Phase 1 .................................................................................................................14 Phase 2 .................................................................................................................14 Confidentiality and sensitivity.............................................................................15 Participants...............................................................................................................15 Client Characteristics...........................................................................................15 Client types ..........................................................................................................16 Partner characteristics ..........................................................................................17 Staff characteristics..............................................................................................17 Young people and financial capability ....................................................................18 Financial Capability - understanding the concept................................................18 Attitude to money ................................................................................................19 Income..................................................................................................................20 Spending ..............................................................................................................23 Banking................................................................................................................26 Credit Unions.......................................................................................................29 Saving ..................................................................................................................29 Borrowing ............................................................................................................30 Debt......................................................................................................................34 Budgeting.............................................................................................................35 Living independently ...........................................................................................36 Attending a financial capability course................................................................38 Section 2 ......................................................................................................................40 Delivering financial skills........................................................................................41 Integrating financial capability into other courses...............................................41 Stand alone course ...............................................................................................45 Developing financial capability ...............................................................................46 The partnerships.......................................................................................................53 Partners’ views.....................................................................................................53 Staff views ...........................................................................................................55 What next? ...............................................................................................................56 Alternative suggestions for financial capability training.....................................57 Section 3 ......................................................................................................................58 Conclusion ...............................................................................................................58 Recommendations................................................................................................60 References...................................................................................................................64 1 Executive Summary Introducing financial capability skills: A pilot study with Fairbridge West, Bristol Introduction Fairbridge is a national charity that works with young people aged 13 to 25 who are amongst the most vulnerable or disadvantaged in the country. The vast majority of Fairbridge clients are not in education, employment or training. ‘I just slipped through the system.’ Fairbridge, through its Bristol centre, Fairbridge West, is one of six organisations that have received funding from the Financial Services Authority to pilot a financial capability initiative with disadvantaged young people. The pilot is intended to identify best practice and create a toolkit for use by other Fairbridge centres nationally and other organisations working with similar client groups. Fairbridge West has received support from several external partners during the pilot. Partners including Bristol Debt Advice Centre, Royal Bank of Scotland and the Money-go-Round Credit Union have worked with the young people on a range of financial skills and money management techniques. They have also provided training and advice to Fairbridge staff. The Personal Finance Research Centre at the University of Bristol has evaluated the financial capability pilot using qualitative research techniques. The evaluation was conducted in two phases. The first phase involved collecting information about a) the levels of financial awareness and inclusion amongst 19 clients at Fairbridge West, and b) the hopes and concerns of the staff and partner organisations involved in the pilot. The second phase consisted of interviews with 20 clients who had been involved with Fairbridge West between January and June, 2005, and further interviews with partners and staff. Levels of financial awareness and inclusion • Most of the young people served by Fairbridge West arrive at the centre with some experience of handling money. They typically carry cash and spend it without much planning. Most, but not all, of the young people seek immediate gratification. This is made worse in some cases by a dependency on drugs, alcohol or cigarettes. ‘As soon as I get money it just burns a hole in my pocket.’ • Many of the clients do not know much about the services provided by banks and other financial institutions, even if they use a bank account regularly. 2 • A few young adults have found it impossible to open a bank account to receive income or benefits. ‘They said I wasn’t allowed… ‘Cos I had to prove where I lived.’ • Saving is seen as important by staff and partners, but is not a priority to most of the clients. • The vast majority of clients borrow money from friends and family. Very few have access to formal credit facilities. • A small number have grown up accustomed to and unquestioning of the relative high cost of money lenders and rental-purchase shops. ‘We pays it ‘til it’s finished but when it gets to like 50-100 quid… we can ask for more after that.’ Introducing