“The Open University has been teaching practical personal finance as part of its degrees for many years as we feel it’s something important that people should know yet many struggle with,” explains Will Brambley, Research Associate at the OU. “So far over 45,000 have taken at least one of the courses, though with the nature of online education some people dip in and out of them and do only the bits relevant for them.”
The True Potential Centre for the Public Understanding of Finance, where Will is based, was launched three years ago to research financial behaviour and provide free online courses in basic money management. There are now three courses: Managing My Money covers all the necessary money management skills from budgeting and saving to debt, pensions and buying a house, while Managing My Investments and Managing My Financial Journey are for those who wish to learn more.
“Last year we published some research we did on the impact of Managing My Money. It seems to have a strong impact on participants’ confidence about finance, and nudges people to budget, shop around, and reduce their borrowing. However while participants came from a broad cross-section of the population in terms of age and employment, we found that most people taking it tend to have a higher-than-average level of education and interest in finance,” Will continues.
“Knowing we have a course that seems to work but that doesn’t reach many of the people who most need it gave us a clear challenge: how can we reach people who don’t actively look for financial education. This matched a MAS priority of expanding the financial capability of working-age adults, especially those on middle-to-low incomes – the “squeezed” or “just-about-managing” segment.”
The Money Advice Service has made it known this middle group is their current focus. Last year’s £7 million What Works fund prioritised support for projects for those at risk rather than those who are in crisis already, including the OU’s new programme. Its argument is that there are gaps in provision here while more is already on offer for those in poverty, in debt crisis or adversely affected by welfare reform.
Meanwhile, money management training programmes are being developed by some housing providers as a proactive response to welfare reforms that could jeopardise claimants’ regular payment of rent. In Bath, social landlord Curo has devised its ‘Passport to Housing’ training programme. It engages current and prospective tenants in a course that walks them through claiming benefits and grants, saving money and reducing energy bills, applying for housing and generally managing money more effectively.
“We realise that once universal credit comes along,” project lead for Curo’s Passport to Housing, Sarah Seeger told Inside Housing in 2014, “we will be in competition with all of the other creditors. So we recognise it was a good thing from a business point of view and from a customer point of view in terms of our mission for happy, safe and popular neighbourhoods.”
In other areas, local authorities have instigated money management courses for claimants affected by benefit caps. In his blog this month, Quids in! editor Jeff Mitchell reports on his involvement in one such course in Bristol.
The key to success for each of these schemes is catching people when they are ready to learn. This could be at a moment of crisis, such as when confronted by welfare reforms, approaching or following major life events when householders’ budgets are dramatically affected, or by nudging consumers to a tipping point when they decide to take action to improve their financial situation.
The Open University’s new programme will try to engage people before they are in financial crisis, however. It will need to maximise the perceived relevance and usefulness of course content, which will be condensed into a short, focused resource. Partners who interact with people in the squeezed segment (as defined by the Money Advice Service) will ensure it meets their needs and then a series of pilots will follow to test its impact. Those already on board include credit unions, community groups, universities, pension providers and Quids in! magazine but the door is open to any organisation willing and able to participate and gather the data required for rigorous assessment.
“Our aim is to reach people who are not yet in crisis and not covered by existing provision, and use our knowledge of behavioural science and experience of financial education to test ways of nudging them to make small changes to their finances, to help them avoid getting into difficulties,” explains Will Brambley. He describes the different elements of the project’s approach as not ‘individually ground-breaking’ but by bringing them together he is hopeful of some interesting breakthroughs that lead onto a continued training offer and information to influence policy and educational practice in future.
“We’re particularly looking to see if we see more people use a budget, cut their spending, reduce their short-term borrowing, and start to save for a rainy-day. This is primarily a research project, with the aim of finding out whether a scalable, tailored resource such as this can improve the day-to-day financial behaviour of the squeezed segment.”