Tag: financial education

Many people in the UK use pawnbrokers for short-term secured loans, so let’s have a look at how pawnbroking works.

Pledges to Pawnbrokers

An individual gives a valuable item (referred to as a pledge) to a pawnbroker who then values said item and agrees to lend the individual part of its value over an agreed period of time. Pawnbrokers earn an income based on the interest they charge on the loan which is secured by the pledged item.

Interest

Depending on your pawnbroker, you will either be charged a monthly or daily rate of interest.

You’ll usually pay a higher rate of interest than you would for a high street loan, but less than you would for a payday loan, which often charge astronomical rates of interest.

Lack of Credit Checks

Under FCA regulation, authorised lenders offering unsecured access to cash must conduct creditworthiness assessments of customers to ensure they can afford to borrow what they wish to.

Despite pawnbroking being FCA regulated, pawnbrokers are not legally required to perform these creditworthiness assessments. This is because the loan is secured against the pledge, so pawnbrokers can assess creditworthiness based on the value of the pledge given to them.

For more information about the world of credit, click here!

Right to Early Repayments and a Cooling-Off Period

The customer can repay the loan at any time during the loan period (usually set at 6 months, but it depends on the pawnbroker) and get their pledge returned. They are allowed to make partial or full early repayments.

Because pawnbroking is FCA regulated, customers are entitled to a 14 day cooling off period where you can walk away from the contract without facing any penalty, providing you do so within 14 days of signing the agreement.

Failing to Repay Your Loan

If you don’t return for your pledge within the loan period and the amount borrowed was £75 or less, ownership of the item is transferred to the pawnbroker.

If you borrowed more than £75, the pawnbroker can sell the item but must return excess funds above the outstanding loan amount back to you, i.e, if the sale of the pledge earns more than the amount due to the pawnbroker, the surplus is owed back to you.

If you have borrowed over £100, the pawnbroker can sell the pledge at the end of the agreed loan period but must notify you of this so that you have a chance to return for the item(s).

Keep Your Ticket

Pawnbrokers must give you a receipt called a ticket when you leave your pledge with them. Make sure you keep hold of this ticket as you will need it when you return for your item. However, if you do lose your ticket, you can click here for more information about what steps to take.

According to data from the Gambling Commission in the year up to September 2022, 44% UK adults gambled in the last 4 weeks. Gambling has a presence in many people’s lives, but how far is too far? When does gambling become a problem?

Social Gamblers

  • Gamble occasionally, such as buying lottery tickets or going to the casino every now and then
  • Hope to win, but expect to lose
  • When they lose, they accept this fact. They don’t continue playing to chase losses
  • Gambling is done as sporadic entertainment
  • Stick to limits of time and money. They are in control of their gambling

Problem gamblers, on the other hand, are the inversion of this…

Do I Have a Gambling Problem?

  • Do you spend lots of time thinking about gambling?
  • Have you tried to stop gambling but haven’t been able to?
  • Do you keep on playing when you lose money to try to win it back?
  • Do you use gambling as a coping mechanism to help you deal with, or avoid, any negative emotions you’re experiencing? Do you use it as an escape from reality? Do you use it to change your mood?
  • Have you ever lied to someone about the amount of time or money you have spent gambling?
  • Have you ever stolen money to gamble? If not, have you ever considered doing so?
  • Have you ever taken our credit to gamble? (E.g, a personal loan or credit card)
  • Would you choose to gamble rather than spending time with your friends or family? Would you cancel plans to gamble instead?
  • Is gambling affecting your social life? Is it affecting your work life?
  • Has gambling caused you any financial problems?

If you answered yes to any of these questions, you may be experiencing a gambling problem. GamCare is a free service you can use for information and support if you are suffering from a gambling problem. Gamblers Anonymous runs local support groups to help you recover from a gambling addiction. You are not alone.

Is Gambling becoming Normalised?

In our blog discussing how gambling can ruin your finances, we briefly looked at how widely advertised gambling is, with 1 in 6 adverts shown during ITV’S programming for the 2018 Fifa World Cup promoting gambling.

Gambling is indeed heavily advertised, and it is not confined to in-person bookies. There has been a continuous growth of online betting services, with online gambling participation rate in the UK rising to 27% in the year up to September 2022.

This ability to bet online is fuelling the problem. It allows problem gamblers to get even more lost in the game, encouraging them to become more withdrawn and unsociable, able to bet in the comfort of their own home.

Between April 2022 and March 2023, food banks in the Trussell Trust network distributed almost 3 million emergency food parcels, acting as the highest amount of parcels ever distributed by them in a year. With that in mind, we thought it was important to provide some information about accessing food banks if you are ever in a situation where you need one.

Why do some People Need Food Banks?

You may need to use a food bank if you:

  • Lose your job
  • Your benefits have been delayed or reduced
  • You’ve been met with unexpected costs, such as a rise in your heating bill or rent
  • Have experienced a change in finances due to divorce

This is not a complete list of why some people rely on food banks, but it does provide some examples of ways in which we might experience a loss of income or a rise in our expenditures.

What do Food Banks Provide?

Food banks tend to give you a food parcel that will last you for 3 days. However, it’s not just about the food. Food banks may also give you other essential items, such as baby care, toiletries, period products and household items.

How to Get a Referral

You will need to have a referral to use the majority of food banks. You can get a referral for you and any family members you live with, including your partner.

You may be able to get referred to a food bank by Citizens Advice, your GP, a health visitor, the police or a social worker, as each food bank works with different frontline professionals.

Contacting Citizens Advice is a good starting point as they can often refer you or point you in the right direction or someone who will. You can set up an appointment with an adviser from Citizens Advice for them to assess your situation and refer you to a food bank if you’re eligible. If they do refer you, you’ll be given a voucher for your nearest food bank.

Alternatively, you can contact your local council to ask them how to get a referral to your local food bank.

How it Works

If referred to a food bank, you should check your voucher for any requirements, such as whether it is only valid on a specific day.

As mentioned before, food banks usually give you a food parcel to last 3 days. They may be able to deliver this parcel to you if you cannot afford to travel to pick it up yourself, or if you are unable to travel due to sickness or disability.

If you require the use of the food bank again, you will need to get a new referral and voucher.

The Trussell Trust is the UK’s largest food bank network, supporting over 1,200 food bank centres. You can find your nearest Trussell Trust food bank here.

 

 

The continued cost-of-living crisis is having a huge impact on food banks. For more information on how to give support to the Trussell Trust’s cause, you can visit their website.

Whilst having a baby can be a very exciting time, it also brings with it many responsibilities, including lots of financial decisions.

First Step, Budget

At Red Star Education, we are big on budgeting. Here are some of our blogs that you may find helpful for your budgeting journey:

When preparing for a baby, a budget is a good place to start, as it helps you figure out your current financial position. How much do you have coming in and going out of your account each week? How much money do you have spare to dedicate to a baby?

Next Step, Baby Budget

Once you’ve figured out your current finances, it’s time to make a budget for all costs that are baby-related. Here, you should think about all of the one-off costs as well as the continuing costs of raising a child. This might include things like:

  • A crib
  • Toys
  • A pram
  • Nappies
  • Baby wipes
  • Bedding
  • A lot of other things!

According to The Money Charity, it costs an average of £24.44 a day for a couple to raise a child from birth up to age 18. For a lone parent family, this cost averages at £29.50 a day. When working out your current budget on the last step, did you have enough spare income to afford this? If not, you need to figure out where you can reduce your expenses.

It’s also a good idea to factor in savings to an emergency fund for your new budget, as you will have a dependent relying on you to maintain financial stability.

Maternity, Paternity and Shared Parental Leave

Maternity Leave

When figuring out your new budget to include baby costs, you will need to know how much money you will be getting during maternity, paternity, or shared parental leave.

For the 2022-23 tax year, you get 90% of your average weekly earnings before tax for the first 6 weeks of maternity leave. For the next 33 weeks, you get the lower figure of either £156.66 a week or 90% of your average weekly earnings. The next 13 weeks will be unpaid. The earliest you can start claiming paid maternity leave is the 11th week before your due date.

These amounts are for the Statutory Maternity pay, which is the minimum you are legally entitled to from your employer. However, you should check your employment contract as some employers offer more generous maternity benefits than this.

Paternity Leave

As an employee, you are entitled to one or two weeks paid paternity leave. This leave cannot start before the baby’s birth and will end within 56 days of the birth.

You will get the lowest figure of either £156.66 a week or 90% of your average weekly earnings.

Shared Parental Leave

Alternatively, you may opt for shared parental leave, where you can share up to 50 weeks’ parental leave and 37 weeks’ pay with your partner.

Once again, you are entitled to receive £156.66 a week or 90% of your average weekly earnings, depending on which is lower.

The Legal Stuff

You may wish to consider taking out life insurance so that your baby will be financially protected if you die. You can read more about life insurance here.

It’s also worth considering making a will. This will enable you to:

  • Name your preferred guardian of your children if you die before they turn 18
  • Say how you want your estate divided when you die
  • Name an executor to administer this
  • Create a trust fund for your children if you wish to (link child trust funds blog)

Financial wellbeing is key for social and economic stability. So, let’s have a look at what financial wellbeing really is and why it’s so important.

The Money and Pensions Service’s (MaPS) Definition

“financial wellbeing is about feeling secure and in control. It’s about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered”

So there you have it – that’s what financial wellbeing is all about; it’s about having that confidence and ability to deal with your own personal finances.

The MaPS examines the UK’s general financial wellness by focussing on the following key areas:

  • Receiving a meaningful financial education
  • Saving regularly
  • Using credit for everyday essentials
  • Accessing debt advice
  • Planning for and in later life

Financial Education Vital to Financial Wellbeing

As you can see from the MaPS’s list, a meaningful financial education is one of the areas that is vital to experiencing a state of financial wellbeing, and that is what we are all about at Red Star Education. We should really emphasise the word ‘meaningful’ here as well, because whilst financial education has technically been part of the national curriculum since 2014, it continues to lack meaning.

The financial education currently provided is often not delivered at all, or is taught by maths teachers who, whilst qualified in mathematics, are not financial experts… mathematics is not finance – they are not synonymous terms.

Financial Wellbeing Benefits Businesses and the Economy

In 2018, 11% of UK employees reported that they had experienced reduced productivity at some point over the last 3 years due to their financial situation.

Therefore, employees having a healthy relationship and understanding of their finances can be very beneficial to workplace productivity.

The MaPS also notes that customers are less likely to fall behind on bills or experience missed payments, which can lead to a steadier cash flow for businesses.

Financial Wellbeing is Important for Physical and Mental Health

According to the Government:

“Life expectancy is one of the main measures of health inequality and is closely related to socio-economic status. This systematic relationship between deprivation and life expectancy is known as the social gradient of health”

Therefore, financial wellbeing , or lack thereof, can have significant effects on individuals’ physical health. In fact, those living in deprived areas live 8 years less on average than those in affluent areas.

Moreover, our relationship with our finances can have enormous effects on our mental health. 86% of respondents to a Money and Mental Health survey of almost 5,500 people with mental health problems, reported that their financial situation had worsened these mental health problems. We speak about how your finances can impact your mental health, and on the flip-side of this, how your mental health can impact your finances, on past blogs.

 

Overall, financial wellbeing is enormously beneficial, not just in terms of your finances, but also in terms of your relationships with others, your productivity, and perhaps most importantly, your physical and mental health.