A special thank you to communications volunteer Monica MacMillan for contributing the following blog post.
As financial literacy month draws to a close, we highlight why Samaritan House’s newest program, the Financial Empowerment Program, is so important to low-income residents in our county.
1 in 3 adults in America carry credit card debt from month-to-month, according to the National Foundation for Credit Counseling. A staggering 61% of adults admit to not having a budget. In other words, many people – even those in the middle and upper classes – have work to do when it comes to establishing healthy financial habits.
For those with lower incomes, however, having a solid foundation on which to base their daily spending decisions can mean the difference between self-sufficiency and crisis. “Commonly, compared with middle class and higher income Americans, low-income persons save much lower portions of their incomes and accumulate fewer assets.” (1) That means that people with lower incomes must think more strategically about ways to save more than those with a larger monthly surplus.
Housing prices in the Bay Area make saving even more challenging than in other parts of the country. According to San Mateo County’s most recent survey, “more than 50 percent of owners with mortgages . . . and 47 percent of renters in [the county] spent 30 percent or more of [their] household income on housing” (emphasis added). For the approximately 46,000 people in San Mateo County who live in poverty (2), trying to pay the mortgage or rent and save strategically each month is no easy task.
Samaritan House created the financial empowerment program in order to give its clients the financial tools necessary to achieve economic stability and self-sufficiency, and to stay out of crisis. Services include educational classes and one-on-one counseling about topics such as budgeting, banking, credit, identity theft, and predatory lending. Certified Volunteer Income Tax Assistance (VITA) volunteers also provide free tax preparation to households of limited means. Perhaps the most inventive aspect of the program is the Start2Save plan, where clients can save up to $500 of their own money and earn $1,000 in matched savings that they are encouraged to use as an emergency fund. To qualify, clients must attend ten hours of financial education classes and save at least $20 per month.
According to Harvard economics professor Sendhil Mullainathan, when people have difficulty saving for the future, it is not simply because they lack self-control. Rather, it is because they don’t have the proper savings tools in place. The Financial Empowerment Program gives the clients of Samaritan House the tools, techniques, and confidence they need to build a more secure future.
For more information about Samaritan House’s Financial Empowerment Program, contact us.
1 National Coalition for Domestic Violence.
2 San Mateo County Nutrition and Food Insecurity Profile, 2010.