This is the text only version. Page 1The Student Flatyour guide to financial helpPage 2Welcome to the 'Student Flat'! When you have completed this resource we hope you will be aware of the financial priorities/challenges faced by students and feel confident that you can manage your own financial affairs. Student 1: Angeline - the spender. My name is Angeline, I am 20 years old and I am a first year full-time student studying Fashion marketing. I am really enjoying uni. I have made loads of friends in my short time here. I share a flat with 2 other students. The shops in London are awesome, I love going shopping. I am always looking for my next pair of shoes… in fact I bought a new pair this morning! I also remembered in time that it was my friend's birthday so I bought her a little present as well, and of course while I was out I had one of those coffees, you know the ones with everything in! I could not believe it by the time I got back I had spent £97. I tried to get some more money from the cash machine to top up my Oyster card and buy some food, but I was told that I had 'insufficient funds'. What should I do? I've been thinking about taking out a credit card, but I have already signed up for a store card when I was shopping. But a new card would really help I think. Student 2: Daniel - the bills. My name is Daniel and I am going to visit my friends in the 'Student Flat'. I am a 24 year-old single father with a daughter, aged 3. I am studying Health Sciences as a full-time student. I live in a rented flat costing £115 per week. I have to pay a child minder to look after my child after school for 12 hours per week when I am at uni - this costs me £8.50 per hour. On top of the other bills my electricity bill is really high - if I pay this I am going to struggle to pay for my daughter's new shoes and for my travel to and from uni. To be honest, I have been struggling with quite a few bills lately - my phone bill is really expensive and I owe money to a catalogue company because I bought some clothes for my daughter. Student 3: Anna - the saver. I am 26 years old and in my first year student studying Public Relations full-time. Before coming to University, I worked as a secretary for a law firm and managed to save some money. I stopped working so as to concentrate on my studies, but I have the option to do some part-time work. I share a flat with 2 other students and my share of the rent is £80 per week. I receive a loan from the student loan company and a maintenance grant. I will get a bursary of £1000 from the University, which will be paid in February and August. I am finding it a bit of a struggle to buy food, pay my rent and share of the bills but generally things are OK because I am careful. I am trying to manage without dipping in to my savings, which I would like to grow for the future, but I might need to spend it. Student 4: Ali - the reckless. My name is Ali and I am aged 19. I have just left school and I applied through clearing to study Music and Media Management as a full-time student. I would eventually like to work for MTV. I used to work for a friend for cash-in-hand before I came to uni. As I arrived a bit late, I have yet to receive my loan and my grant. I live with 2 other students in the Student Flat and I like going out a lot. I am now being asked to pay my share of the bills and my savings have almost disappeared. My rent is £60 per week and now I am starting to worry about having enough to manage for the term. What shall I do until my student funding comes through? Should I get a job? I have heard from other students on my course that there is sometimes work to be had at events at the O2 arena. I am not sure how it works about working as well as being a student, what about paying tax? How much gets taken away from my earnings? Page 3 - When it comes to money... is your head in the clouds?For each of the 12 questions choose which statement best applies to you... These are the four statements: You get 1 point for choosing: Not like me at all. You get 2 points for choosing: A little bit like me. You get 3 points for choosing: A lot like me. You get 4 points for choosing: Exactly like me.
Question 1: I am always in control of my money Question 2: I know exactly when my student loan/grant will be paid Question 3: I know exactly how much money I will have to live on each week/month Question 4: I check how much money I spend each week/month Question 5: I plan for large items of expenditure that I know are coming up Question 6: I plan for unexpected items of expenditure Question 7: I always pay off my credit card(s) at the end of the month Question 8: I never exceed my overdraft limit Question 9: If I can't afford something I want, I wait until I have saved up enough to buy it Question 10: I know where to go for information and advice on money issues Question 11: I have thought ahead to how I will manage over the summer vacation Question 12: I search around for the best deals
Your score: Our financial student advisor Matilda will guide you through this program and asks... How well do you think you did? If you got under 20: Mmm, not good. Planning your finances will be important to you to avoid getting into difficulty - try the questionnaire again. Then go to the next page and have a look at the next few exercises in order to help you plan ahead... If you got between 20 and 36: Mmm, not bad - you are like most students! If you got over 36: Mmm, very good.
Page 4 - Welcome to the flat. Three of the student's discus their financial issues.Anna is worried that the rent bill is not receiving the attention it deserves. Ali is still being up after clubbing all night and the 3 of then decide to go wake him up! Page 5 - Index page: Access each of the students financial story, one at a time and complete the task's for each one...Click on the students below and follow their financial story...
Page 5a - angeline's story - the spenderWatch Angeline's story (or read her transcript): "My name is Angeline and I am a first year full-time student aged 20 studying Fashion marketing. I am enjoying University. I have made loads of friends. I share a flat with 2 other students. I love shopping - the shops in London are awesome. I see a pair of shoes and feel I just have to have them. I bought them. Then I remember it's my friend's birthday so I buy her a present. While shopping I decided to have a break and get a coffee, you know the one 's that have everything in. By the end of the afternoon I had spent £97. I went to get some money out of the cash machine to top up my Oyster card and buy some food, but I was told there are 'insufficient funds' in my account. What do I do? I have been thinking about taking out a credit card. But I already signed up for a store card when I went shopping in Oxford Street. Now might be a good time!! What do my friends think? What do my friends do? Do they borrow or do they save? Are they worried about how much they pay for borrowing? Are they thinking about ways of increasing their income?" What do you think Angeline should do now?... Learn more about Money to help her... Task 1: Questions 1 to 5. Q1. Cash Machines Q2. Student Bank Accounts Q3. Hire purchase Q4. Credit cards and interest You owe £500 on your credit card at an APR of 17.5%. You only pay off the minimum repayment of 2% of the outstanding balance (£5/month). How long would it take you to repay this off in full (assuming you do not spend any more with the card!)? a. 5 years and 6 months If you said ‘c’ well done. It takes a shockingly long time to repay a credit card debt at the minimum repayment rate. Q5. Credit cards and interest a. £158 The answer is c! The interest you will repay is more than the original amount you owed on the card. Credit cards can be a very expensive form of borrowing.
Task 2: Borrowing money game - don't gamble your money away...! Rate the following types of borrowing as typically cheap, moderate or expensive:
Answer: If you said 'Expensive' - Score 1
2. Doorstep lender - is it Cheap, Moderate or Expensive? Answer: If you said 'Expensive' - Score 1
3. Authorised overdraft - is it Cheap, Moderate or Expensive? Answer: If you said 'Cheap' - Score 1
4. Secured loan - is it Cheap, Moderate or Expensive? Answer: If you said 'Moderate' - Score 1
5. Pawnbroker - is it Cheap, Moderate or Expensive? Answer: If you said 'Expensive' - Score 1
6. Catalogue buying - is it Cheap, Moderate or Expensive? Answer: If you said 'Expensive' - Score 1
7. Credit card - is it Cheap, Moderate or Expensive? Answer: If you said Cheap, Moderate or Expensive - Score 1 (all 3 count)
8. Personal Loan - is it Cheap, Moderate or Expensive? Answer: If you said Moderate or Expensive - Score 1 (both these count) Your Score: If you scored 1 or 2 - "mmm.... not good, have a look at all the potential correct answers (some types of borrowing have more than one answer) then think carefully about the costs of the different forms of borrowing. If you have borrowed expensively, seek advice. " If you scored 3, 4 or 5 - "Not bad, but have a look at all the potential correct answers (some types of borrowing have more than one answer) then think about the costs of any borrowing you do before signing any agreements." If you scored 6, 7 or 8 - "Well done - you are not likely to get caught out by very expensive borrowing. However, have a look at all the other potential correct answers answers for your information. (some types of borrowing have more than one answer)
More Information: Authorised overdrafts are the cheapest forms of borrowing, provided you stay within your agreed overdraft limit. If you exceed your overdraft (i.e. unauthorised overdraft), the borrowing becomes very expensive very quickly. Although catalogue buying can be convenient and can allow you to spread the cost of payment over many months, it can be very expensive. As well as paying interest on the amount you borrow, prices may be higher than you if you shopped around. Doorstep lenders and pawnbrokers are both very expensive forms of borrowing, with the interest charged being very high. Credit cards are a cheap form of borrowing provided you pay back the balance on time. Once you start repaying the cards over time, interest clocks up, adds to the overall amount you owe, and credit cards can quickly become an expensive form of borrowing. Secured loans tend to be cheaper than unsecured personal loans. Because they are ‘secured’ against the person’s home (property), any default on the loan can result in the lender seizing the property.
Task 3: Information and guidance - The cost of borrowing money (more information) Look at the four types of lenders to reveal information about the cost of borrowing, this is not a quiz. 1. Bank - Withdraw £100 Unauthorised overdraft 2. Store card - pay bill for £100 3. Pawnbroker - borrow £100 You decide to pawn some of your jewelry to pay your gas bill. You borrow £100 but the you thought this was a good idea because you did have to worry about your credit rating - your just needed to show proof of your address - your showed your gas bill! 4. Loan shark - borrow £100
Now after reading the four pieces of information do you think you could advise Angeline? Matilda says: Unless you are careful, borrowing money generally costs money. It is always better to save for what you want or need. Saving is generally the cheapest form of getting what you need, for some repayments can cost upto (or more) than twice what you were required to pay at the time once the interest has been added.
Page 5b - daniels's story - the bills!Watch Daniels's story (or read her transcript): "My name is Daniel and I am going to visit my friends in the 'Student Flat'. I am a 24 year-old single father with a daughter, aged 3. I am studying Health Sciences as a full-time student. I live in a rented flat costing £115 per week. I have to pay a child minder to look after my child after school for 12 hours per week when I am at uni - this costs me £8.50per hour. On top of the other bills my electricity bill is really high - if I pay this I am going to struggle to pay for my daughters new shoes and for my travel to and from uni. To be honest, I have been struggling with quite a few bills lately - my phone bill is really expensive and I owe money to a catalogue company because I bought some clothes for my daughter. What do you think Daniel should do now?... Learn more about Money to help him... Task 1: Questions 1 to 6. Q1. Mobile Phones If you said false, well done - contract mobiles often do not offer the best deal. Whilst call charges at first glance may appear cheaper, you need to read the fine print carefully and make sure you don’t exceed your contracted allowance. With a pay-as-you go phone, there is no monthly charge and you won’t be faced with a big monthly bill you can’t pay. Q2. Council tax If you said false, well done - Full-time students are exempt from Council Tax but part-time students are still liable. If full-time students share a property with non-students they may still be liable to pay some council tax, depending on the circumstances of the other occupants. Q3. TV licence If you said false, well done - If you’re living away from home, in halls of residence or in a shared house, then you’ll need a television licence. Students planning to return home over the summer may be able to claim a discount. Q4. Student Loans If you said false, well done - Student loans from Student Finance England are paid in three instalments: at the end of September, at the beginning of January and towards the end of April. Q5. Means-Tested State Benefits If you said false, well done - Whilst most full-time students cannot claim means-tested benefits, part-time students, and full-time students with children or with an illness or disability may be able to claim certain benefits, depending on their circumstances. Q6. Transport If you said true, well done - Buses are cheaper than the Underground, and remember that full-time students and certain part-time students can get a student Oyster card offering 30% discount on Transport for London.
Task 2: Consequences game - The object of this game is to get you to think about your spending. What is essential and what is not? Thirty four Bills will appear one by one. Select each Bill that you would (do) spend your money on and ignore those you never do. The idea to to only choose half of them at the most. Rent/Halls fees
Now you have selected your 17 Bills - look at your chosen ones and now, be ruthless but removing 4 of them... ie cut down your expenses...
Task 3: Now do you think you could advise Daniel? Matilda says: "Not being able to pay your bills is a sign that you need to budget and gain control of your money. Whilst you may be able to get away with not paying money for a bit, eventually unpaid or partly paid bills have a habit of growing and leading to real debt problems. Studies have shown that being in control of your money leads to better mental health and well-being and this will lead to a better academic performance. By working through these exercises, we hope you will understand the important of budgeting so that you can pay your bills, how to prepare a budget and think ahead. "
Page 5c - anna's story - the saverWatch Anna's story (or read her transcript): "I am 26 years old and in my first year studying Public Relations full-time. Before coming to University, I worked as a secretary for a law firm and managed to save some money. I stopped working so as to concentrate on my studies, but I have the option to do some part-time work. I share a flat with 2 other students and my share of the rent is £80 per week. I receive a loan from the student loan company and a maintenance grant. I will get a bursary of £1000 from the University, which will be paid in February and August. I am finding it a bit of a struggle to buy food, pay my rent and share of the bills but generally things are OK because I am careful. I am trying to manage without dipping in to my savings, which I would like to grow for the future, but I might need to spend it.
What do you think Anna should do now?... Learn more about Money to help her... Task 1: Questions 1 to 6. Q1. If a cake is cut into 8 equal slices, what % of the whole cake does each slice represent? a) 8% Answer: The answer is "b" because: 1/8 x 100% = 100/8 = 12.5% What is interest?
Q2. Student Loan repayments - You will start paying back your student loan... a) As soon as you start work Answer: The answer is b (Once you start earning over £15000). Whatever your circumstances, you will have to repay your student loan all the time you are earning over £15,000.
Q3. If £5000 saved grew by £12% in one year, what would be the total savings after one year? a) £5600 Answer: If you said A, well done - Explanation:
Q4. If the interest rate was 4% (instead of 12% like before), what would be the total savings after one year on the same £5000 investment? a) £5200 Answer: Agaiin the answer is A - Explanation:
Q5. Identity Theft (ID) is when someone fraudulently uses your identity for their financial gain e.g. to take out credit or sign up to services in your name. a) Never tell anyone who you are Answer: The answer is (b). As long as you are careful and take practical steps to protect yourself, you do not need to take out insurance against ID theft.
Q6. If you had £2000 outstanding on your credit card and the annual interest payable was 24% (which is not uncommon for credit cards – check yours if you have one!), what interest would you pay in a year? a) £400 per year Answer: The answer is c. £2000 x 24/100 = 48000/100 = £480
Task 2: Saving for what you want, look at these 3 examples: Example 1: How much will you want to pay for a car? - say £4,000 How much will you be able to save each month? - say £90 So how much willyou save in a year? - £1080 So if the interest rate was 4% how much would you have in a year? - £1123.2 So how long will it take you to save for the car? a) 44.1 months b) 39.5 months c) 42.7 months Answer: the correct answer is C
Example 2: How much will you want to pay for some new clothes? - say £500 How much will you be able to save each month? - say £60 So how much willyou save in a year? - £720 So if the interest rate was 4% how much would you have in a year? - £748.8 So how long will it take you to save for the clothes? (approximately) a) 7 months b) 8 months c) 9 months Answer: the correct answer is B
Example 3: How much will you want to pay for your holiday? - say £1,500 How much will you be able to save each month? - say £70 So how much willyou save in a year? - £840 So if the interest rate was 4% how much would you have in a year? - £873.6 So how long will it take you to save for the holiday? (approximately) a) 20.6 months b) 21.5 months c) 24.7 months Answer: the correct answer is A Remember - its better to save than to borrow.... now go to Task 3....
Task 3: Now do you think you could advise Anna? Matilda says: "Why save? Some people save to build up a nest-egg for 'rainy days' - those emergencies in case you need to buy an essential piece of equipment of something needs fixing. Some people save up to pay for a treat such as a special holiday with friends in the summer vacation. Others save for future consumption such as buying a car, buying a house or saving for retirement. Why bother? Why not borrow instead?? Having highlighted Anna's experience the out come should be clear - saving is better then borrowing!"
Page 5d - ali's story - the reckless!Watch Ali's story (or read his transcript): "My name is Ali and I am aged 19. I have just left school and I applied through clearing to study Music and Media Management as a full-time student. I would eventually like to work for MTV. I used to work for a friend for cash-in-hand before I came to uni. As I arrived a bit late, I have yet to receive my loan and my grant. I live with 2 other students in the Student Flat and I like going out a lot. I am now being asked to pay my share of the bills and my savings have almost disappeared. Your rent is £60per week and now I am starting to worry about having enough to manage for the term. What shall I do until my student funding comes through? Should I get a job? I have heard from other students on my course that there is sometimes work to be had at events at the O2 arena. I am not sure how it works about working as well as being a student, what about paying tax? How much gets taken away from my earnings? What do you think Ali should do now?... Learn more about Money to help him... Task 1: Questions 1 to 6. Ali is aged, 19, so the National Minimum Wage for his age group (rates as at October 2010) is £4.92/hour. The rate is higher for people age 22 and over. Q1. Over one year, how many hours of work would Ali have to do to earn £1500, assuming he is paid at the National Minimum Wage? a. 305 hours Answer: The answer is "a" because Ali is 19, his NMW is £4.92/hour therefore he would have to work 305 hours per year to earn £1500.
Q2. How many hours/week is this? (presuming he works the 310 hours per year) a. about 10 hours/week Answer: The answer is "c" because it's approximately 6 hours per week.
Q3. Income Tax - Students don’t have to pay income tax. True or False? Answer: The answer is false. Students have to pay income tax on any earnings or other taxable income above the personal allowance (£6475 in the 2009-10 tax year). Student loans and grants are disregarded in full when income is assessed for tax purposes.
Q4. Income Tax refunds - I can claim it back it I have paid too much tax. True or False? Answer: This is True. Many students pay too much tax without realising it. To check how much tax you should be paying go to the 'government' website. You can also reclaim overpaid tax by contacting HMRC - contact details are on their website (all the web addresses and links can be found on the Resources Page at the end of this program). Also you can see a student adviser within your institution.
Q5. Income Tax rates - Do tax rates change: a. Never Answer: The answer is "c". Tax rates and thresholds are set in the annual budget when they may or may not be changed (but usually are!) - see the HMRC website (all the web addresses and links can be found on the Resources Page at the end of this program).
Q6. National Insurance - For students who have a job, the amount of class 1 national insurance paid is: a. nothing – students are exempt from paying national insurance contributions Answer: The answer is b. For the tax year 2009-10, class 1 National Insurance contributions (NICs) paid are 11% of any earnings from employment above £110 a week (the 'earnings threshold') and up to £844 per week (the Upper Earnings Limit). You also pay one per cent of earnings above £844 a week as Class 1 NICs. If you are self-employed, you pay 'Class 2' NICs at a flat rate weekly amount of £2.40.
Task 2: Tax game - On your way to University you come across the TAX man who asks you some questions about Tax codes, you need to get all questions correct to get to your destination... Q1. What is a tax code? a) Something that lets the government find out where you work. Answer: The answer is C - A tax code is used by your employer to calculate the amount of tax to deduct from your pay. If you have the wrong tax code you could end up paying too much or too little tax. Q2. If your Tax code is BR, how much will be taken off ALL your wages? a) 10% Answer: The answer is B - The BR (Basic Rate of tax) tax code is used when all your income is taxed at the basic rate - 20% in the 2009-10 tax year. Q3. What is an L Tax Code? a) Taxed later in the year Answer: The answer is C - An L code is used for those eligible for the basic Personal Allowance - 647L for the 2009-10 tax year. if you multiply the numbers in your L tax code by 10, you will get an indication of how much you are allowed to earn before paying tax (to the nearest £10) i.e. 647 x 10 = £6475 Q4. If you earned £7500 in the tax year 2009-10, how much of your earnings would be liable to be taxed? a) £1025 Answer: The answer is A - The Personal Allowance is £6475, therefore if you earn £7500, you are allowed to keep £6475 and are only taxed on the rest i.e. £1025. Q5. If you earn £7500 in the tax year 2009-10, and have no other taxable income, how much tax will you have to pay (assuming your personal allowance is £6475)? a) £231.60 Answer: The answer is A - The lower rate of tax is 20%, therefore 20% of £1158 is £231.60 Q6. If you earned £7500 in the tax year 2009-10 and your pay slip had the tax code BR instead of 647L, how much extra tax would have been wrongly taken away from you by April 2010, assuming you stayed on the BR tax code all the way through the tax year? a) £35.22 Answer: The answer is B - If you said b, well done! You would be having a lot of extra money taken away from you if you had the wrong tax code. So... check that you are on the right tax code by checking your pay slip. For more information check out the Inland Revenue (HMRC) website. Explanation:
... Well done for getting past the Tax man .... However do remember:
Task 3: Now do you think you could advise Ali? Matilda says: "Many students have to do some paid work in order to make ends meet. It is important to think about the consequences of working on your studies and to plan accordingly when you will work. Later, when you graduate, employment whilst your are a student will have given you not just valuable work experience but also valuable financial capability skills. By having worked through the last few exercises, we hope you will have an understanding of the basics of income tax, tax codes, wages and thinking about your work-life balance."
Page 6 - Catch up on the students now they have taken advice from the advisor, and of course discussed their situation with their fellow students.Is Angeline still buying shoes? Has Daniel had to get another job, or has he decided to quit uni? Has Anna spent her savings? Has Ali paid his rent? NOw watch the video: (summary) It highlights that Daniel has seeked help from student services and is able to carry on studying as he is getting the correct about of financial help. Anna has decided to keep some of her savings and evenly spread out and send the rest. Angeline now works in her favourite shoe shop and even gets a discount! And the girls have decided that they will ask Ali to leave the flat as he is not pulling his weight financially and they do not want to be liable for any costs he may be incurring. Early on the students would have benefited from filling out a simple financial plan, after you have seen the video go to the next page and try and fill in a simple plan of your own.
Page 7 - Print out and fill in these two forms to help you:Budget planner Income maximisation
Page 8 - These student video diaries are currently being filmed - Please go to the next page...
Page 9 - further resourcesThese are direct links to outside sites that maybe of help: http://www.direct.gov.uk http://www.moneysupermarket.com http://www.uswitch.com/savings-isa/ http://www.adviceguide.org.uk/ http://www.hmrc.gov.uk/index.htm http://www.londonmet.ac.uk/advice http://www.nus.org.uk http://www.nationalrail.co.uk http://www.ukcisa.org.uk/student/working_during.php http://www.www.homeaccess.org.uk http://www.britishcouncil.org/new/ Page 10 - site map and creditsThis resource has been funded by the Financial Services Authority. Content and scripts: Dr. Matilda Buckley |