Your money: Let's hope for a fairer, more honest 2015

Category: Basic Money Management
Published: Sunday, 28 December 2014
Written by Admin

But there have been some interesting success stories along the way. For instance, I suggested that the rapper Sean Combs, formerly known as Puff Daddy and P Diddy, should set up his own bank. Why? Because he has become a successful multi-millionaire businessman, while many of our bankers face disgrace. In January, it was the former Co-operative Bank chairman Paul Flowers who was in the spotlight - more for his sex and drugs shame than his banking exploits.

Almost a year on, and his former bank has this month failed the Bank of England's stress test - which measured how well it would do in a future economic downturn. The failure - and subsequent admission that it won't make a profit for the next two years - is symptomatic of the complete disaster the bank became under Flowers' chairmanship.

In February, I reported that around a fifth of all households in Britain have been forced to complain about their energy company. I wrote then that it means that if you haven't been compelled to complain, then one of your neighbours probably has.

Of course, that news came as little surprise as "energy companies have proved to be leaders in putting up prices and giving us bad service for many years". That's a record they look almost certain to maintain for years to come, with Scottish Power currently under notice to improve its complaint handling record by January or face a sales ban.

I have also lambasted Bob Dylan this year for taking cash to flog lingerie. That was part of a wider piece complaining about celebrities - such as Sir Michael Parkinson, Annette Crosbie, Cilla Black and Carol Vorderman - lending their names to dodgy financial products.

My conclusion was that banks have been forced to pay out billions for mis-selling useless payment protection insurance so Sir Michael Parkinson and the rest of his money-grabbing mates should be forced to make things good out of their own pocket for every mis-sold loan or insurance they helped to trick people into buying.

Also this year, I reported on the folk who queued up to be paid double their money at a Lloyds Bank ATM at Mansfield Woodhouse in Nottinghamshire. It had been loaded incorrectly by a member of staff who put £20 notes in the tenner slot. It meant anyone withdrawing £100 was paid £200 and so on.

When the mistake was discovered word was quickly spread by jubilant people eager for friends to cash in and a long queue built up at the ATM. My view was that those who did so knew that it was an error and were morally wrong to cash in on it.

I was reminded of that earlier this month when online bargain hunters took advantage of a blip at Amazon Marketplace which left many items wrongly reduced to 1p for a short time. Some shoppers rushed to take advantage and then boasted on social media about buying stuff they didn't need simply because it was so cheap.

But once again they knew that they were cheating someone, in this case a number of small businesses that were affected by the glitch. And by helping themselves to what were obviously mis-priced goods, they were on unpleasant moral ground again. My view? Why not report a mistake, rather than looking to profit from it?

All these stories show that little has changed in 2014. But my hopes for more positive outcomes in 2015 remain undimmed. Hopefully, this time next year, I'll be able to praise banks and energy companies, and we'll all live in a more honest, trustworthy world where celebrities don't lie to line their own pockets at our expense.

Good financial nous has to start in childhood

One subject that I've returned to time and again this year is financial education. It was added to secondary schools' curriculum in September, but there's still an awful lot of work to be done. The idea? To produce young adults who leave school with a real sense of the value of money so that they are less likely to fall into debt problems.

The fact is that only around half of schools in the UK follow the National Curriculum. Meanwhile financial education is not statutory at primary schools.

That's not good enough, reckons Maike Currie of Fidelity Personal Investing. "Waiting until children reach their teens to teach them about money is too late," she told me.

She points out that on average, children own their first mobile phone at eight and already buy items online at 10, often using their parents' or older siblings' credit or debit cards.

Children can open a bank account and have a debit card at age 11, and every day children are exposed to a deluge of payday loan adverts on television. "It is crucial that children in primary school are taught about finances. The fact that it is not is a major shortcoming," Maike says.

Of course, parents have a huge responsibility - which I know only too well as the father of two boys. But research by Nationwide suggests that adults are viewed by their children as bad spenders.

Many children think their parents are a poor example because they waste and overstretch their finances each month by spending money on non-essential luxuries. A quarter said parents wasted money on cigarettes and alcohol, while around a fifth said they overspent on gifts nobody needs.

Michael Steer, a deputy headteacher and star of Channel 4's Educating Yorkshire, said: "It's vital that parents have a frank and open conversation with children from an early age about how finances work, so when they do stand on their own two feet they have the skills to manage their money effectively.

"Parents can and do help model good behaviours when it comes to money, including allocation of pocket money or paid-for chores, while financial services providers can do their bit."

There are many different education schemes from banks and insurers - indeed Nationwide launched a youth account this year that comes with a range of financial education support. While I welcome all such help, schools should be teaching basic money management and budgeting to give kids respect for money. I've made a new video discussing the issue and the importance of financial education for children with Maike Currie, which you can watch at ind.pn/1zs5iXg

Sean Combs: Could he run a bank?

The rapper has transformed himself into a successful businessman, welcomed into boardrooms across the world.

His non-music business ventures include the clothing lines Sean John and Sean by Sean Combs - for which he earned a Council of Fashion Designers of America award. His products include a men's perfume called I Am King.

He also owns a movie production company and has launched two restaurants. But crucially, he has gone into global partnership with leading brands such as Ciroc vodka and DeLeón tequila, the latter of which was a 50-50 deal with the British drinks giant Diageo.

Can a bank takeover be far away?

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@simonnread



Hey Pa. legislators: It's time to address financial literacy in the classroom

Category: Basic Money Management
Published: Saturday, 20 December 2014
Written by Admin

The CPA profession has been championing the cause of financial literacy for more than a decade. Through volunteer programs, the Pennsylvania Institute of Certified Public Accountants (PICPA) has partnered with libraries, schools, local media and legislators to provide guidance on basic personal financial planning principles. We have reached thousands of individuals through these efforts, but this is not enough. A more integrated education plan is needed to teach consumers, at a very early age, some basic money management principles.

The numbers tell a frightening tale. Consider the following:

  • According to the Project on Student Loan Debt, the majority (69 percent) of students graduating from public and nonprofit colleges in Pennsylvania had student loan debt with an average of $28,400 per borrower in 2013.
  • In a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive, 75 percent of respondents said they or their children have made personal or financial sacrifices because of monthly student loan payments. Only 39 percent said they fully understood the burden student loan debt would place on the future. Plus, a whopping 60 percent now have at least some regret over their choice of education funding.
  • According to a study by Moodys Analytics, people under age 35 have a negative 2 percent savings rate, meaning they are spending more than they have.
  • The most recent Survey of Consumer Finances by the Federal Reserve Board revealed that the lowest quartile of net worth is less than $50, and the mean net worth of the lowest quartile is negative $13,400.
  • The Employee Benefit Research Institute 2014 Confidence Survey reports that 24 percent of workers are not at all confident of having enough money for a comfortable retirement. Fifty-eight percent of workers and 44 percent of retirees report having a problem with their level of debt, and 36 percent of workers report they have less than $1,000 in savings and investments.


AKPK to focus on financial education to create awareness

Category: Basic Money Management
Published: Thursday, 16 October 2014
Written by Admin

 

Credit Counselling and Debt Management Agency (AKPK) plans to focus on financial education to create awareness to the public on basic money management skills and the responsible use of credit.

Its newly appointed CEO Azaddin Ngah Tasir said the financial education plays the most essential part to curb the financial debt problem and act as an early prevention to it.

"We believe prevention is better than cure. In other words, we better educate them before they fall into the debt traps," he said during the sideline of the AKPK's Memorandum of Understanding (MoU) signing with Amanah Ikhtiar Malaysia (AIM) yesterday.

Under his leadership, he wants to change the perception of the people that AKPK is not just the place for highly indebted individuals but for everyone that need professional advice in managing their finances.

Azaddin said he plans to introduce various programmes that will suit all lifecycle going forward next year, which will focus on universities students, fresh graduates, individuals who want to raise a family and also retirees.

He said these four categories of people have different needs for instance young people would keen to know more about car loans and credit card procedures while those who are raising a family would like to know more about insurance and how to protect their children.

"We would like to provide them with such professional advices and we provide it free of charge," he said.

To date, 292,775 individuals have attended AKPK's counseling services and from that number, 115,706 customers have applied to enroll into its debt management programme (DMP).

Azaddin said out of the 115,706 cases they received through DMP since the programme been introduced, 6,271 cases with total outstanding of RM255.1 million has been successfully solved while 69,666 cases is still under the programme with a total portfolio value of RM5.7 billion.

He said financial planning was the main cause of debt problems with 22.8%, follow by high medical expense and failure or slowdown in business registered at 16.2% and 16.1% respectively.

Other reasons includes lost control on usage of credit, job retrenched and high cost of living.

Commenting on whether high cost of living will increase the debt cases, Azaddin said the issue of high cost living is not new and it is the responsibility of the individual to manage their financial.

"As consumer, we need to lay out a plan when we buy something or getting out a loan to make sure we are capable of affording it.

"We in AKPK are willing to help in providing professional advises to everyone to assist them on their financial management," he said.

Earlier, AKPK has signed a MoU with AIM to enhance financial education among the members of AIM called SAHABAT.

This move is to help SAHABAT to gain the skill in managing their finance and sustaining their businesses.



5 Basic Money Management Lessons for Teens

Category: Basic Money Management
Published: Wednesday, 15 October 2014
Written by Admin
About

Michele Lerner, a contributing writer to The Motley Fool, has been writing about personal finance and real estate for more than two decades. Her work has been published in a wide range of publications and websites including Bankrate, The Washington Post, Insurance.com, HSH.com, REIT magazine, National Real Estate Investor magazine, The Washington Times, Urban Land magazine, Investopedia, and in numerous Realtor association publications. She is the author of HOMEBUYING: Tough Times, First Time, Any Time.

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