Building Assets for the Rural Future
Provide Financial Education, Counseling & Coaching
Provide Financial Education, Counseling & Coaching
Financial literacy and education is one response to an increasingly sophisticated financial environment rife with predatory lending practices and products. Financial literacy levels among high school students and working-age adults are low, have been decreasing steadily over the past decade, and are particularly low among the poor, those with less education, and some minorities. Financially knowledgeable consumers are better able to make well-informed economic decisions for themselves and their families, thus increasing their economic security, and in turn fostering better economic outcomes for their communities. Financial education may be particularly important in rural communities, where predatory mortgage lending is more prevalent, mortgage loan interest rates are higher, local banks have declined in numbers, and low-income residents are more likely to be under-banked.
How the Tactic Is Applied
- Provide financial education for young people
- Bring financial education to the workplace
- Tailor financial education to community needs
- Increase availability of financial coaching for low-income individuals
Provide Financial Education for Young People
Alternatives Federal Credit Union (New York)
The Support Center (North Carolina)
Since 1990, Alternatives Federal Credit Union, in Ithaca, NY, has conducted an award-winning Student Credit Union program that combines financial education and financial services by offering opportunities for youth to learn about finances while managing their own money. Offered at elementary, middle, and high schools, the program gives youth the chance to learn the basics of banking, saving, and credit through real-world activities. Participating students open a checking account with no monthly fees and no minimum balance and earn a higher dividend rate than that for a regular savings account. The program employs educational programs and activities to encourage students to make small weekly deposits. In addition, some students have the opportunity to be trained as tellers for an in-school Student Credit Union and to process transactions for other students. At the end of 2007, there were almost 1,300 Student Credit Union members, with total deposits nearing $1.1 million.
The Support Center, a North Carolina community development credit union intermediary, offered a Youth Financial Education (YFE) program in North Carolina through 2010. In addition to providing age-appropriate financial education curricula for schools on topics such as saving, spending, investing, and money management, YFE offered savings and investment clubs, summer camps, and after school programs. While in operation, the program partnered with local school districts, youth groups, and local credit unions to provide the services and to provide tours of area financial institutions.
Bring Financial Education to the Workplace
Pacific Community Ventures (California)
OnTrack Financial Education and Counseling (North Carolina)
Workplace financial education programs have been shown to have favorable effects on employee financial behavior and to increase savings among employees, both for retirement and in general. In California, Pacific Community Ventures (PCV) invests in companies aligned with its community development mission and then conducts on-site financial education workshops for those companies’ lower-wage employees. PCV partners with financial institutions to provide workshops on topics that increase employees’ financial knowledge and that help move them into mainstream financial institutions and away from more predatory and expensive financial transactions. These workshops for employees are offered in addition to regular business advisory services that PCV provides to managers of the companies in which it invests.
OnTrack Financial Education and Counseling, in Western North Carolina, follows a similar workplace-based approach to financial education. At the request of area businesses, OnTrack will provide financial education to groups of employees on money management, savings, homebuyer education, and understanding credit and credit reports. Additionally, OnTrack offers individualized, one-on-one financial counseling sessions regarding budget and spending plans, debt reduction, and retirement planning.
Tailor Financial Education to Cultural Groups
Latino Community Credit Union (North Carolina)
As part of its mission of improving the financial condition of the Latino community in the state, Latino Community Credit Union (LCCU), in Durham, NC, has offered bilingual financial education workshops free of charge to any member of the community. The workshop curriculum was specifically tailored to meet the needs of newly arrived Latino immigrants and the unbanked who are unfamiliar with the financial system in the United States. Using a participatory learning model for the workshop that is familiar to Latinos—called “popular education”—the curriculum covered topics such as how to use a financial institution, budgeting and saving, using credit and credit cards, buying a car or house, and understanding taxes. At the end of the workshop series, participants who attended all six workshops received a certificate of completion at a formal graduation ceremony.
Increase Availability of Financial Coaching for Low-income Individuals
Wilson County Department of Social Services (North Carolina)
Simply offering short-term financial workshops or specialized financial products may not be enough to enable some low-income individuals and households to build significant assets. It may be necessary in some cases to offer more intensive one-on-one guidance on financial behavior, through financial coaching. Financial coaching attempts to change financial behaviors over time through an ongoing relationship between the coach and the client. Coaches can be volunteers or professionally-trained financial social workers. This technique is similar to the model employed by financial planners who coach more affluent clients on investment decisions, and it holds promise when applied in the context of low-income individuals seeking to build their financial assets.
In Wilson County, North Carolina, the Wilson County Department of Social Services, at its Career Plus Center, offered a financial coaching program called CASH’N (Changing Attitudes with Smart Habits – Now!). The service was made available to low-income families at or below 200% of the Federal Poverty Level, and all families leaving North Carolina’s Temporary Assistance for Needy Families (TANF) program were referred to CASH’N, although there was no requirement to join. In its third year at the time of this writing, the program worked with families on an individualized basis, evaluating household financial needs, setting financial goals, coaching families through financial problems and decisions, and assisting families with taking control of their money and their lives. Families made progress toward their financial goals by meeting weekly with a “coach”—that is, a certified financial social worker—and by completing weekly home assignments. After meeting a goal, the individual could “cash in” and receive an award, usually a gift card or other financial prize. Program participants remained in the program between six months to two years, depending on the goals set. Although a more extensive evaluation of the program is still underway, initial evaluations of the program showed that most participants had higher credit scores upon exiting the program than when they began.
On the Internet
Financial Literacy: An Overview of Practice, Research, and Policy, Federal Reserve Bulletin
Alternatives Federal Credit Union, New York
 Sandra Braunstein & Carolyn Welch, Financial Literacy: An Overview of Practice, Research, and Policy 87 Fed, Res. Bull., 445 (2002), available at http://www.federalreserve.gov/pubs/bulletin/2002/1102lead.pdf.
 Lewis Mandell, The Financial Literacy of Young American Adults (2009), available at http://www.jumpstart.org/assets/files/2008SurveyBook.pdf; Marianne A. Hilgert & Jeanne M. Hogarth, Household Financial Management: The Connection Between Knowledge and Behavior, 89 Fed. Res. Bull. 309, 311 (2003), available at http://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf.
 Hilgert & Hogarth, above note 2, at 309.
 Carsey Institute, Subprime and Predatory Mortgage Lending in Rural America: Mortgage Lending Practices that can Trap Low-Income Rural People (2006), available at http://www.carseyinstitute.unh.edu/publications/PB_predatorylending.pdf; The Joint Center for Housing Studies, The 25th Anniversary of the Community Reinvestment Act: Access to Capital in an Evolving Financial Services System 95-97 (2002).
 Alternatives Federal Credit Union, Student Credit Union, http://www.alternatives.org/studentcreditunion.html.
 Alternatives Federal Credit Union, 2007 Annual Report (2008), available at http://www.alternatives.org/2007ANNUALREPORT.pdf.
 Braunstein & Welch, above note 1, at 451-52.
 Pacific Community Ventures, Investing in Change: Human, Financial and Intellectual Capital for California Communities, Annual Report 2006 8 (2007), available at http://www.pacificcommunityventures.org/media/pdf/2006-PCV-AnnualReport.pdf.
 Advisory services for company managers include strategic guidance, access to a network of business advisors for one-on-on consulting, and networking opportunities with other small businesses and entrepreneurs.
 Interview with Laurie Knowles, Director of Education, OnTrack Financial Education & Counseling (Apr. 13, 2010).
 Latino Community Credit Union, Financial Education for Immigrants: A Guide for Developing a Financial Education Program to Integrate Recent Immigrants to the U.S. Financial System 17-18 (2008), available at http://latinoccu.org/files/education/Guide_for_Developing_a_Program.pdf.
 Popular education is an approach to education that has strong ties to Latino cultures and history, and it emphasizes learning through participation, real life applications, and experiential learning. See Paul Castelloe & Dorothy Gamble, Participatory Methods in Community Practice: Popular Education and Participatory Rural Appraisal, in The Handbook of Community Practice 261-75 ( Marie Weil, ed., 2005).
 Latino Community Credit Union, Building a Better Future: A Financial Education Program for English as a Second Language Classes Teachers’ Edition v (2002), available at http://latinoccu.org/files/education/teacher/Introduction.pdf.
 Latino Community Credit Union, above note 12, at 18.
 J. Michael Collins, Christi Baker & Rochelle Gorey, Financial Coaching: A New Approach for Asset Building? 6 (2007), available at http://www.aecf.org/~/media/Pubs/Topics/Economic%20Security/Other/Financ....
 Interview with Susan Parker, Self-Sufficiency Program Manager, Wilson County Department of Social Services (Jan. 25, 2010).
 According to the Center for Financial Social Work, based out of Asheville, NC, a financial social worker is a specially trained social worker who works with individuals to address the attitudes, behaviors, feelings, and thoughts that disrupt financial security and emotional stability. For more information see the Center for Financial Social Work’s website at http://www.financialsocialwork.com/.
 Interview with Susan Parker, above note 18.