Money Management Help And Information

Corporate Appointeeship is the name given to the process of an accredited organisation becoming the designated Appointee to a person that is unable to manage their own finances. Corporate appointees are often local authorities in the UK and firms of solicitors or consumer advocate organisations that provide an appointeeship service when a suitable family member or friend is unavailable or lacking to take over the daily money management services and responsibilities of the person in need of an appointee.

Corporate Appointee’s need to be approved by the Department Of Work And Pensions in the UK as the appointee is responsible for receiving the benefit entitlement payments on behalf of the individual they are representing. In the UK Corporate Appointee services have been extended by the Money Carer service that has served to highlight the lack of financial protection that often leads to the financial abuse of vulnerable individuals unable to manage their finances in the UK.

External links

• Money Carer Appointeeship Service
• DWP Appointeeship Information

Corporate Appointeeship is the name given to the process of an accredited organisation becoming the designated Appointee to a person that is unable to manage their own finances. Corporate appointees are often local authorities in the UK and firms of solicitors or consumer advocate organisations that provide an appointeeship service when a suitable family member or friend is unavailable or lacking to take over the daily money management services and responsibilities of the person in need of an appointee.

Corporate Appointee’s need to be approved by the Department Of Work And Pensions in the UK as the appointee is responsible for receiving the benefit entitlement payments on behalf of the individual they are representing. In the UK Corporate Appointee services have been extended by the Money Carer service that has served to highlight the lack of financial protection that often leads to the financial abuse of vulnerable individuals unable to manage their finances in the UK.

External links

• Money Carer Appointeeship Service
• DWP Appointeeship Information

Daily money management is a term used to describe the growing profession of Daily Money Managers (DMM) in the United States. Daily money management, as the name suggests, relates to the provision of personal financial management for individuals that are incapable or unwilling to attend to this everyday task themselves. Many clients of daily money managers in the United States are older people or adults with sensory or physical learning disabilities although some daily money management services provide assistance specifically for ‘time poor’ individuals that hire a DMM to manage their finances on their behalf.

The American Association of Daily Money Managers (AADMM) is an organisation that has been started to self regulate daily money managers and to provide best practice guidelines also. In the United Kingdom, daily money management services have recently been spearheaded by the social enterprise organisation Money Carer. In the UK research commissioned by the Actuary Profession has highlighted that need for better provision of asset and money management services given the fragmented manner in which daily money management services are provided informally via carers and family members of vulnerable adults. Formal money management provision includes corporate appointeeship and deputy services via local authorities and other organisations when a vulnerable adult has no suitable relatives or friends that can undertake daily money management tasks.

It is widely acknowledged that the current processes that represent the vast majority of daily money management arrangements for vulnerable adults are often less than secure and exposed to incidences of financial abuse. Indeed recent research commissioned by the charity Action On Elder Abuse highlights the extent of the problem in the UK

A Debt Management Plan (DMP) is a method used in various countries for paying personal unsecured debts (which typically have gotton all out of control in the sense of payments due taking too large a portion of income, or even exceeding it) that involves cataloguing all the debts, assessing income and budget, and re-negotiating interest rates and payments with the lenders, based upon evidence that the result will be a higher likelihood of collection by the lenders.

A Debt Management Plan is typically run by impartial and independent debt management companies or by creditor controlled consumer credit counseling services that are be funded by creditors to collect and distribute money. In this model, repayment plans are developed by creditors telling the groups what the creditor requirement is and rewarding the group by paying them a percentage of funds collected from debtors and sent to creditors. This percentage of funds is often referred to as “Fair Share”.

In recent years, creditors have significantly reduced or eliminated fair share payments and Credit Counselling Organisations have been very heavily critisised for acting in the best interest of their creditor funders in many cases as oppose to consumers that approach them for debt help.

The result has been the creation of many impartial and independent fee-charging debt management services who do not accept fair share payments, but rather charge consumers a fee for their service. However, these have little control over creditors either.

The for-profit model of services allows the consumer to sign up for a service that is independent of their creditors.

In the United States the Internal Revenue Service (IRS), the regulator of charities, has raised grave concerns about the validity of the charitable status of many non-profit credit counseling agencies. The IRS states “Although many credit counseling organizations provide valuable services to persons who find themselves in debt, the IRS is concerned that some have used their tax-exempt status to circumvent consumer protection laws and take advantage of those who are already in financial distress.”

The IRS also made it clear that funding to credit counseling groups is nothing more than paid debt collection. Typically a credit counseling group calls these payments ‘Fair Share’ payments instead of debt collection compensation. The IRS stated , “Fair share payments are payments made by some credit card companies to credit counseling organizations based on the amount the organization collects from the consumer.”

One of the concerns raised is that credit counselling groups that are paid for services by creditors is in fact nothing more than debt collector masquerading as a charity since they provide a commercial service, debt collection, to creditors for revenue and income. It would be hard to find a charitable purpose and mission in that activity.

The IRS also stated “The examinations completed thus far have uncovered abuses involving organizations that: fail to provide education; operate as commercial businesses; and serve the private interests of directors, officers, and related entities.” It is true that in a DMP with a credit counseling group that a debtor may be able to gain some relief from interest rates or fees but that is granted solely at the discretion of the creditor.

There is an incorrect perception that DMPs are a formal arrangement with creditors - in the end, whether the debtor uses a free creditor sponsored DMP or a fee-charging DMP company, accepting any terms of a DMP proposal put forward on behalf of the debtor is accepted always at the discretion of the creditors. A good debt advice service recognizes this and will only suggest a debtor pays what they can afford after their priority costs (mortgage, utilities, food etc) no matter what.

Fee-charging DMP companies will often charge up-front fees as an ‘admin’ charge, and then will charge a percentage of the surplus that is paid to the creditor as a fee to the debtor. The larger the payment the debtor is encouraged to make, the larger the fee the fee-charging DMP company receives. Also, there is the possibility that a fee-charging DMP company will enter a debtor into this kind of arrangement when it is not in the debtors interest and bankruptcy might be a better alternative, especially if the debtor has large debts and it would take them many years to pay their debts back this way.

The longer the debt takes to pay back, the more money the fee-charging DMP company will collect its fee directly from the person with debt - money that could be going to clear the debt itself if no fees were charged to the debtor.

People that use a DMP to eliminate their debt will typically only have unsecured debts such as credit cards included in their plan. Secured debts, like mortgages, car payments, rent and utilities, are not subject to monthly payment reductions. Unsecured debts that are not listed on the DMP may be closed by the creditor once they are notified of participation.

When someone participates in a DMP it is usually marked on the credit reports. FICO has publicly stated, however, that they do not include DMP status as a factor in determining credit score. Therefore, the impact of the DMP on one’s ability to get credit varies widely depending on their history before the DMP, the consistency of their payments while on the DMP, the type of credit they are requesting, etc. Generally, DMP is considered to have the least effect on credit compared to other debt repayment plans, such as debt settlement or Chapter 13 bankruptcy.

Stakeholder Pension - Benefit and need of investing for your retirementWhether it’s only a few years away or still over the horizon, your retirement needs careful planning. If you do not have your own pension you’ll have to rely solely on the State and your own savings to support you. To enjoy a comfortable retirement you will probably need a yearly income of at least 2/3rds of your salary at retirement. So if you leave it too late to review your pension arrangements, you may not be able to enjoy the retirement you want.

Stakeholder Pensions

A Stakeholder Pension is a personal pension.

On 6th April 2001, the Government introduced stakeholder pensions to provide a low cost pension, designed to encourage more people to invest for their retirement.

With the real value of the State pension decreasing each year, when measured against the average rise in earnings, it’s unlikely that the State pension will provide you with enough income to enjoy the lifestyle you want in your retirement. The Government recognizes there is a problem and this is why the Stakeholder Pension has been introduced.

ISAs

ISA stands for Individual Savings Account. These were launched in April 1999 by the Government to encourage investment. The aim is to help the value of your money to grow over time and/or provide an income.

Different types of ISA

There are two types of ISA. You can have one maxi ISA or up to two mini ISAs of different components each tax year. A tax year runs from 6th April one year to 5th April the following year.

The table below sets out the maximum current amounts (until April 2008) you can pay into ISAs each tax year.

Component	Mini ISA	Maxi ISA
Cash	Up to £3,000	Up to £3,000
Stocks and shares	Up to £4,000	Up to £7,000
Overall limit	£7,000	£7,000

Note: You can only invest a maximum of £7,000 in ISAs each tax year.

You can’t take out a mini ISA and a maxi ISA in the same tax year. If you do this, you will only get the tax advantages on the first ISA you take out in that tax year and the second will have to be closed.

Difference between investing and saving

While both investing and saving aim to improve your financial well being, investing is more about aiming to accumulate money over the long term, to provide you with some future financial security. Saving, on the other hand, generally means putting money aside for the shorter term, which could be to help pay for a holiday, a special occasion, a child’s education and so on.

In a savings account your money is secure, generally accessible and gives greater certainty about growth. But in exchange for this security, you will normally only receive a modest return which reflects the current rates of interest available which may seem quite low.

Investing, on the other hand, has the potential to bring bigger rewards over the longer term as many investments are linked to the movement of the stock market, which can provide a much greater return than you could expect from a bank or building society savings account. However, because the value of stocks and shares will go down as well as up, it also carries a greater risk and you may not get the returns you expect. Unlike a bank or building society savings account your capital is not secure and you may get back less money than you originally invested. (See Risks of investing below).

Different ways to invest

You can either invest as an individual, buying shares, bonds and property or you can invest in a pooled investment, which is the easiest option for most people. A pooled investment is where your money is pooled with that of other investors in order to buy a large portfolio of assets, which is then professionally managed, an example of which is a stocks and shares ISA. Pooled investments have the advantage of enabling you to spread risk, although the value of investments can go down as well as up and you may get back less than you invested.
Investing for income and investing for growth

Some people, for example those who are thinking of retirement or who are no longer earning a regular salary, choose to invest their capital to get a regular income. Others invest in order to accumulate a lump sum that they can then use to cover major expenditure in the future, such as their children’s education, family weddings or a holiday home to escape to.

Shares and bonds

When you buy shares on a stock market, also known as equities, you are buying a stake in a publicly listed company. When a company offers its shares for sale to the public they effectively ‘float’ on the stock market. Generally, when the value of a company rises, your shares in the company are worth more and if it falls so does the price of your shares. Past performance is not a guide to future performance.

Governments or companies issue bonds in order to raise money. When you buy them you get a guaranteed rate of interest over a fixed period, plus the price per bond, which is agreed at outset, at the end of the term. While they are generally regarded as lower risk investments than equities, the level of risk obviously depends on the market conditions and the stability and economic performance of the bond issuer. Bonds are often traded on the market, as investors look for the best available rates of interest for their money. The downside is that you may get back less than you invested.

The stock market and the FTSE 100 Index

The term ’stock market’ refers to the marketplace where investments generally are bought and sold. An index is a smaller selection of companies that you can look at to get an idea about the market’s movements. The best known of these in the UK, the FTSE 100 Index, is made up of the 100 largest companies on the London Stock Exchange.

Investing a lump sum or regular payments

It depends what you are able or prefer to do. If you invest a lump sum, you get immediate benefit from the large amount if the market rises - and immediate losses if it falls.

A regular payment plan, on the other hand, enables you to build up your investment portfolio gradually, while keeping your payments at a level you are happy with. It also has the effect of helping to even out the daily ups and downs of the value of your investment.

Benefits of investing

If you can afford to put your money aside for longer periods, say five years or more, investing offers greater potential for your money to grow. Most investments are stock market based and over the long term have the potential to earn more than a bank or building society savings account. Savings accounts offer security of capital, are generally more accessible and give greater certainty of growth. But historically, they have not achieved the same level of growth as investing in the stock market, although past performance is not a guide to future performance.

Length of Investment

Of course you can invest your money for as long as you want, but there are a few points you need to bear in mind. Short-term investment in the hope of making big gains quickly is risky. You should be thinking in terms of an investment period of at least five years. And the longer you leave your investment, the more likely you are to see a return, but the downside is that you may get back less than you invested.

Risks of Investing

When you invest in shares, you accept a risk to your capital in exchange for potentially higher returns - and what is acceptable to one person may be sheer recklessness to another. But if you prefer not to take risks with your hard-earned savings, there are a number of ways you can reduce that risk.

For example, the more companies you invest in, the more you spread the risk. If you were to invest equally in shares in four companies and one of them did particularly badly, that would adversely affect 25% of your money. If, on the other hand, you had invested in a fund that covered 100 companies equally, the poor performer would only affect 1% of your investment. Conversely, investing in a smaller number of companies means you benefit more when they do well and if you invest in a large number of companies you don’t benefit as much.

Likewise, by limiting your investment to a single industry sector, say telecommunications, or geographical region, say the Far East, your returns will grow quickly when those areas are booming, but will also feel the negative effects of any economic downturn more quickly. Variations in exchange rates will also have an impact on the returns on your investment.

You can also place some of your money in funds that invest in cash, corporate bonds and property to add balance to your portfolio.

Sensible investing is all about setting the amount of risk you are prepared to accept.

Choosing the right investment for you

This depends on a number of factors, including your attitude to risk, how much access to your money you want to have, the length of time you want to invest over and so on.

Deciding which products are right for you

Your choice depends on what you want to achieve. For example, if you’re aiming for your money to grow over time, you might choose to invest in a UK FTSE 100 Index Tracking Fund, which aims to match the performance of the FTSE 100 Index as closely as it can, subject to changes. But of course the value of this type of investment can, like the FTSE 100 Index, go down as well as up and you may get back less than you invested.

If you are looking for retirement income, you could opt for a Stakeholder Pension and build up a portfolio by selecting funds that cover companies in different countries and industry sectors; or by balancing different types of investment such as shares, gilts and fixed interest.

Please note: If you would like advice you should see an independent financial adviser, who may charge for any advice.

 

Budgeting

Find out how a personal budget will help you make the most of your money and avoid over-commitment. It will also help you plan for the future and negotiate with any people you owe money to.

 

Why budget?

With an accurate budget, you’ll be able to cut out unnecessary expenses and save money, or stop running up big debts. If you already have debt problems, a budget will show you how much spare cash you have. This will help when you talk to your creditors (those you owe money to), because you’ll be able to make realistic offers to pay them back over a period of time.

• Dealing with debt problems

 

Calculating your personal budget

A budget planner has headings for different kinds of income and spending, against which you can put your own figures. You’ll find several calculators on the internet; choose the one that suits you best.

• Use the Financial Services Authority’s budget calculator online (opens new window) (opens new window)
• Download a budget planner from the British Bankers Association website (PDF, 70K) (opens new window)
• Help with PDF files

 

Outgoings

Start by working out what you spend: check recent bank statements, and bills for gas, electricity, telephone, Council Tax, water rates, insurance and similar expenses. Don’t forget to include anything you pay by standing order (for example, mortgage or rent payments, loan/hire purchase repayments, or child maintenance).

The next step is to estimate what you spend on everyday items (for example, food, clothes, petrol, pet food and newspapers).

Finally, include estimated amounts for unexpected and occasional costs (for example, Christmas and birthday presents, car and household repairs, dentist and optician bills, holidays and outings).

Work out the total outgoings for a full year and divide by 52 or 12 to get a figure for each week or month.

 

Income

Next list all of your income:

 

 

• check your payslips to get an accurate figure for wages
• look at statements for benefits, Child Tax Credit and similar income
• include rent from lodgers or contributions from adult children

You should average out any irregular income and ignore one-off or uncertain amounts.

Work out your total income for a week or a month, then take away the expenditure to work out whether you have any spare money, or whether you’re over-committed.

• How to find information on income and expenditure (opens new window)
• More about money management on the Myvesta UK website (opens new window)

 

If you have a shortfall

If your income falls short of your expenditure, you will have to prioritise your spending and cut back on commitments you can’t afford. Think about:

 

 

• shopping around (especially for ongoing commitments such as gas, electric and telephone costs)
• in the short-term, cutting everything down to the bare essentials
• if you have debts, deal with them immediately

 

• Plan your way out of debt

At the same time, it’s important to make sure you’re getting as much income as possible:

 

 

• find out if you can get additional benefits or tax credits
• make sure that everyone who lives with you and earns money is paying their share

 

When you start to have money to spare

Budgeting is all about making sure that you have money left over after paying all your bills. You may want to think about putting spare money into a savings account to pay for unexpected expenses, or towards a major expense (for example, a holiday or the deposit on a new car). If it’s a reasonably large amount, it’s a good idea to invest it so the money grows.

Shop around before choosing a savings or investment product to make sure you’re getting the best deal. You may also want to take professional advice before you make a decision.

 

Keeping track of your budget

A budget is only an estimate of what your income might be, and what you’re likely to spend. It’s important to keep track of your actual income and expenses to make sure your budget is accurate.

It’s a good idea to keep a notebook with you and, for the first couple of months, note everything you spend. You’ll be able to change your budget to make it more accurate, and you may get some ideas of where to save money. It’s also a good idea to review your budget on a regular basis, to take into account big changes in your circumstances (for example, a new job).

 

Where to get help and advice

Many organisations offer free help and advice on budgeting. It is important to ensure that any money management or debt help organisation is independent and is not funded by credit card companies or banks directly due to the conflict of interest that this brings about.

 

Myvesta UK

Organisations such as Myvesta UK and the governement FSA are a good starting point for personal financial advice.

• Chat Live with a Myvesta UK advisor Here
• How to contact the FSA (opens new window)
• Get to grips with your finances using tools from the FSA (opens new window)

More useful links

 

• Managing money
• Use the Financial Services Authority (FSA) health-check service (opens new window)
• Information and advice about dealing with debt from National Debtline (opens new window)
• Advice about money from the Citizens Advice Bureau (opens new window)
• Free tax advice if you can’t afford a professional adviser (opens new window)

Grocery Shopping

• Plan your menu a week ahead and buy foods accordingly.
• Always shop with a list so that you are not tempted to buy unnecessary items.
• Visit supermarkets at the end of the day, when fresh food is often marked down in price.
• Look for “own brand” items at supermarkets. They are usually cheaper.
• When you get to the supermarket, immediately check out the ‘reduced item’ shelves (usually at the end of an aisle) to see if there is anything you could use.
• Buying fresh vegetables from the local market or greengrocer usually works out cheaper than buying them from the supermarket.
• Buy fruit and vegetables that are in season or even grow your own.
• Fresh fruit and vegetables that need washing and cutting are much cheaper than prepared or frozen items.
• If possible avoid prepared meals or other convenience foods as you are paying for someone else to prepare them.
• Remember packed lunches work out much cheaper than buying sandwiches or eating out.
• Watch the ‘sell by’ dates as you shop. You do not want to throw away food which you bought cheaply but cannot use in time.
• Keep a running total as you shop and check against the till receipt – mistakes do occur.
• Take advantage of all the money-off coupons you can.

Other Shopping

• When buying larger items, don’t be afraid to ask for a discount.
• Don’t be afraid to haggle (try to get a price reduced) – especially if you are paying cash.
• Look for sales — they can be at any time of year (and are sometimes continuous). Christmas cards are very cheap in January!
• Buying second-hand can be good value — but be sure things are in good working order, and won’t fall apart.
• Buying cars two years old and keeping them for three years is the most economical way to own a car — but make sure you get the car thoroughly checked over before you buy.
• Take advantage of discounts for buying in bulk – but only when you are sure you will be able to use the items. There is no point buying ‘3 for the price of 2’ if the product will be out of date before you can use it. Tinned goods and toiletries are ideal things to buy in bulk.
• When you are thinking about buying something, don’t be afraid to walk out of the shop if you are not happy about the product, the shop or anything else.
• Buy the items that do the job best: don’t pay just for the ‘right’ label.
• Shop around for the best price. If you are thinking of using credit, remember to compare the APR as well as the prices.

Services

• Get a written quote when having work done to your home or car.
• Try DIY if you can (but don’t take unnecessary risks).
• Don’t waste money on electricity and heating. Turn switches off when you’re not using lights and appliances.

Special Occasions

• Many people don’t plan spending for things like Christmas and end up struggling. Putting aside an amount each month could help.
• Can you make your own Christmas or birthday presents? This may sound a very old-fashioned idea but some of your older relatives might still like a gift you have made more than one you have bought.

Other Ideas

Below are just a few more ideas that can help your money go further.

• Only pay with cash. This is easier said than done, but if you can’t afford something, save for it.
• Walk or cycle to work whenever possible. This saves money, keeps you fitter and is better for the environment!
• Remember that restaurants and fast-food places charge a high price for what you get.
• Keep your budget up to date.
• Keep looking for ways of making the most of your income and cutting down on your spending.
• Keep a record of what you spend and check this against your bank statement.
• Keep receipts and guarantees in case things go wrong.
• Energizing

We All Need Money Management Help From Time to Time….
Having a positive approach to your daily money management needs will enable you to better appreciate where you are financially and will help put you in a clearer position to achieve your financial goals in the short, medium and long term. Why is it then that so many people seem to live their lives in a financial muddle?

Managing your finances is rocket science!
The financial world that we live in is now very different to that of our parents and grand-parents. We have much less time in which to focus on the important task of daily money management and the number of financial and credit products that we have in our lives has more than trebled over the last 30 - 40 years. So, even though most people understand that they should pay more attention to their financial concerns the prospect of allocating the time needed to deal with credit cards, mortgages, mobile phones, insurance premiums and car payments etc can be an intimidating task.

Hence, for many people, after fighting the traffic to and from work, working hard all day, sometimes bringing work home too and juggling our career aspirations alongside our family and relationship commitments, there are not always enough hours in the day. Not surprisingly, a common casualty of our busy lifestyles is efficient money management.

Helping People Breathe More Easily
Helping busy people with everyday money management is why this website has been developed. As a free money management information centre, www.moneymanagement.org.uk helps people to get more out of life by translating the whole money management world and its terminology.

The range of money management products, services and information available via this website enable people to manage their financial lives by combining traditional ‘hands on’ money management help with more complicated money investment and management techniques.

Saving You Money
Efficient money management is more than simply paying your bills on time. That is why a key aspect successful money management plans is to regularly review and implement ways in which you can get better deals from providers and suppliers of household services. Here, you can examine the various money saving experts and service providers to ensure that you are getting the most suitable mortgage products, utility bills, credit cards, personal loans and other financial products that form part of a successful money management plan.

We hope that this free service is helpful to you and that you save money and create more personal wealth for yourself and your family in the future.