Key is holding a job, not just getting one
In these hard times, many people believe the solution to our nationâ€™s economic ills can be summed up in one word â€“ jobs. But thatâ€™s just the start. A stable economy can only exist when every family finds a place in the economic mainstream. Finding that place requires financial literacy.
Yet the basic financial skills much of the middle class learned as teenagers can be a foreign language to the working poor. Real economic inclusion takes savvy â€“ knowing how to handle workplace challenges, stick to a budget, and build good credit. If middle-class and well-off Americans benefit from financial counsel, then why not the working poor?
Financial literacy matters. Far more than half of all Americans will slip in and out of poverty at least once in their lifetime. Struggling to make ends meet is harder when you donâ€™t know the financial ropes. It means continuing to rely on costly, seat-of-the-pants solutions when money is tight â€“ like payday loans and check-cashing outlets.
When youâ€™re poor and you have bad credit, life costs more â€“ car loan rates are higher, cell phone and utility companies demand steep deposits, prospective employers check credit scores. Opening a bank account? Forget it.
What if we could bring real, hands-on financial literacy to those who need it most? An innovative model called Financial Opportunity Centers has shown real promise, helping nearly 30,000 low-income individuals reach economic viability through a three-pronged approach:
First, training and counseling to help clients land a job and keep it. Second, one-on-one financial coaching in such basics as opening a bank account and establishing or building credit. Third, instruction in how to access public benefits, such as the Earned Income Tax Credit or housing support. This crucial assistance is something many low-income people may not know about â€“ or may be too proud to claim.
The Local Initiatives Support Corporation, a national nonprofit that invests approximately $1 billion annually in poor neighborhoods across the nation, is bringing this model to those who need it most.
Over the past four years, LISC has helped establish a network of centers that bring community leaders and exemplary financial service providers together to give these families the financial know-how they need. There are now centers in 66 neighborhoods.
These changes donâ€™t happen overnight. But in the past two years the LISC model has not only helped nearly 8,000 people get jobs, it has also enabled nearly 6,000 to increase their net income, and more than 3,500 to improve their credit scores â€“ key to greater and more affordable economic options. And nearly 75 percent of participants improved their monthly cash flow and net income.
Financial Opportunity Center staff members stick with their clients long after they find work. The staffers coach and counsel to help change bad financial habits â€“ changing lives in the process.
These centers have already given a boost to thousands of people like Suzette Ruth, a Cincinnati single mother of two school-age sons who lost her job of 10 years and faced eviction.
An employment coach helped her develop the skills to find a new job and keep it. A financial coach taught her budgeting, banking and the nuts-and-bolts of building good credit. Now back at work for more than a year, Ruth no longer pays excessive fees for everyday transactions, covers her monthly expenses and has been able to keep possession of her home. She is finding her place in the economic mainstream.
There is no magic bullet for better economic circumstances. Employment, housing, job training and financial know-how together weave the strongest fabric of economic stability. Only by joining these elements can we make sure every family gets not just a job, but a firm grip on a stable economic life.
PHOTO (Top): A man looks over employment opportunities at a jobs center in San Francisco, California, in this February 4, 2010. REUTERS/Robert Galbraith/Files
PHOTO (Insert): A man walks into the New York State Department of Financial Services Foreclosure Relief Unit in Brentwood, New York February 10, 2012.Â REUTERS/Shannon Stapleton