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Advancing Disadvantaged Communities-NJCFE ymposium-12-19
This document discusses strategies for improving financial wellness for disadvantaged communities. It notes that lower-income clients have different priorities and mindsets compared to upper-income clients. They are more focused on present needs due to income volatility and scarcity mindsets. The document provides tips for financial educators, such as using irregular income budgeting, telling success stories of similar people overcoming challenges, and connecting clients to local assistance resources. It also reviews costs of living in New Jersey and benefits available from programs like SNAP, SSDI, SSI, TANF, Section 8 housing, utility assistance programs, and warning signs of financial trouble.
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Advancing Disadvantaged Communities-NJCFE ymposium-12-19
- 1. Advancing Disadvantaged and UnderservedCommunities: Strategies for Improving Financial Wellness Barbara O’Neill, Ph.D., CFP® Rutgers Cooperative Extension boneill@njaes.Rutgers.edu
- 2. Two Worlds ofPersonal Finance Upper Income Clients • Future orientation • Focus on building wealth to reach future goals • Have financial resources to work with Disadvantaged Clients • Most concerned about a crisis and/or present needs • Focus on debt and/or basic asset building • Have limited income and/or assets to work with
- 3. Two Worlds ofPersonal Finance Upper Income Clients • Impressed by expertise and credentials • Like stories and data about future goal achievement • Typically do not receive needs-based public benefits Disadvantaged Clients • Impressed by people who “have walked in their shoes” • Like stories about how “people like them” overcame the same challenges that they have • May qualify for needs-based public assistance
- 4. Commonalities of AllClients • Living within a budget • Paying income taxes • Establishing and maintaining good credit • Concerns about retirement • Potential to “Nudge” positive financial behaviors • Want to progress from “Point A” to “Point B”
- 5. Asset Building Continuum Source:Shawn Young, Financial Health Institute
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- 8. Great Resource • Year-longstudy of financial insecurity with 235 LMI households in five states • Almost 300,000 cash flow records; combines research data and stories • Many jobs have irregular hours and unpredictable pay • Big issue: Coping with income “dips” caused by factors such as bad weather and slow sales https://www.amazon.com/Financial-Diaries-American-Families- Uncertainty/dp/0691172986
- 9. 2. Scarcity Mindset Source:Shawn Young, Financial Health Institute A belief that “there will never be enough” so thoughts and actions stem from a place of lacking https://www.debtr oundup.com/scar city-mindset- keeping-you- poor/
- 10. Examples of ScarcityMentality Thinking and Actions • “I wish I could afford that” • “I guess I’ll always live paycheck to paycheck” • “What I have is good enough” • “I won’t ever be able to have what I really want” • Under-tipping waiters to pay less for meals • Not investing to avoid losing money • Clinging to possessions (even hoarding) • Extreme focus on “keeping what you have” • Mistaken belief that you can’t make any more money
- 11. 3. Tunneling and“Mental Bandwidth” Issues Source: Shawn Young, Financial Health Institute As people focus more on dealing with a financial crisis or scarcity issues, they have less brainpower to focus on other things in life.
- 12. 4. External Locusof Control • Tendency to praise or blame external factors for things that happen • Belief that chance or fate controls their life Source: https://en.wikipedia.org/wiki/Locus_of_control
- 13. Tips for Working WithLMI Clients
- 14. 1. Use anIrregular Income Budgeting Process Source: https://www.moneyunder30.co m/variable-income-how-to- manage-money-when-you- dont-earn-steady-paycheck
- 15. 2. Provide Success Opportunities “The$11 Savings Story”
- 16. 3. Rethink Adviceto Automate • LMI households need flexibility • May need to “rob Peter to pay Paul” at any time • Automated savings deposits and bill-paying reduce cash flow flexibility
- 17. 4. Tell PowerfulStories • Stories about people like them • Can be people you know or from the news • Focus on “The Messy Middle” and best practices
- 18. 5. Dress Down •Don’t set yourself apart from people that you are trying to help – Business casual – Leave the suit and heels at home Source: https://www. thestreet.co m/lifestyle/w hat-is- business- casual- 14629494
- 19. 6. Understand TaxCode Features for LMI Households • Saver’s Tax Credit: https://www.investopedia.com/articles/retirement/04/0 31704.asp • Earned Income Tax Credit: https://www.irs.gov/credits- deductions/individuals/earned-income-tax-credit • Refundable Tax Credits: https://www.irs.gov/credits- deductions-for-individuals
- 20. 7. Connect WithLocal Human Services Agencies • Provides a “warm handoff” to pro bono clients • Gain insights about life circumstances of clients • Look for organizations that agencies belong to
- 21. 8. Find orCreate a Resource and Referral Directory for LMI Clients • Names and contact information for local human services • Type(s) of assistance available • Requirements to receive assistance (e.g., income and assets)
- 22. 9. Use RelevantExamples • Low-ball income and savings examples when speaking • De-emphasize the “F-Word” (future) – Use “Now” and “Later” instead • Your Money, Your Goals (CFPB) Empowerment Toolkit: https://files.consumerfinance.gov/f/201407_cfpb_you r-money-your-goals_toolkit_english.pdf • FDIC Money Smart: https://www.fdic.gov/consumers/consumer/moneysm art/adult.html
- 23. 10. Guide andEmpower Be a “guide on the side”, not a “sage on the stage”
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- 25. NEFE Evaluation Toolkit WhitePaper https://toolkit.nefe.org/evaluation-resources/evaluation-white- paper/financial-education-groups/low-income-consumers
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- 27. Resource: Irregular Income PlanningWorksheet Source: http://www.refleta.com/income- budget-worksheet-image-high- def/irregular-income-budget-dave- ramsey-budget-templates/
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- 29. Key Take-Aways • Maketime to fully appreciate the mindset of financially unstable individuals. You will not teach a seminar or counsel a client ever again in quite the same way • People with low incomes do not lack financial knowledge and self-control. In fact, many use very creative strategies to get by • The best thing that financial educators can do is to provide tools and strategies to help people smooth their incomes and reduce stress
- 30. The Cost ofLiving in New Jersey: Realities and Resources Kim Cole, Education Outreach Coordinator Navicore Solutions
- 31. How Much Doesit Cost to Live in NJ? According to Zillow, the average home price in NJ is $345,000 Average Fair Market Rent Prices in NJ
- 32. How Much Doesit Cost to Live in NJ? Food - $352.22/person (groceries) Transportation – Average gallon of gas $2.92 Average car insurance $1,520/year Property taxes – Most expensive in the nation Healthcare – The average annual employee contribution at private companies is $1,595 (22% above the national median)
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- 34. How Much DoesSocial Security Pay? According to the United States Social Security Administration, in 2019 the average monthly social security payment was $1,461 per month. That is… $17,532 per year
- 35. SSDI Most SSDI recipientsreceive between $800 and $1,800 per month. The average payment in 2019 is $1,234 $14,808 Per Year
- 36. SSI The monthly paymentamount for the SSI program is based on the "federal benefit rate" (FBR). In 2019, the FBR is $771 per month for individuals and $1,157 for couples $9252 Per Year
- 37. What About FoodStamps?
- 38. What About OtherPrograms? Work First NJ – Temporary Assistance for Needy Families ( and General Assistance A family of 3 receives $559/month from TANF An individual received $185/month from GA The four purposes of the TANF program are to: Provide assistance to needy families so that children can be cared for in their own homes Reduce the dependency of needy parents by promoting job preparation, work and marriage Prevent and reduce the incidence of out-of-wedlock pregnancies Encourage the formation and maintenance of two-parent families
- 39. Section 8 Section8 HCV program is based on the premise that housing costs (rent and utilities) should not exceed 30 percent of a household's income. A New Jersey family of four in 2018 has to earn $71,900 a year or less to be considered low-income, according to the Department of Housing and Urban Development. Initial requirements: Citizenship status- Must be a U.S. citizen at the time of application. Family eligibility- Everyone in the household must qualify. Eviction History- Must not have a prior history of evictions. Income- Income limitations are set in place per county, per state.
- 40. Utility Assistance LIHEAP- The Low Income Energy Assistance Program - heating costs and certain medically-necessary cooling expenses USF - Universal Service Fund - to help make energy bills more affordable for qualifying households whose annual household income is at or below 185 percent of the Federal Poverty Level (FPL). Fresh Start – Part of USF - allows eligible New Jersey households participating in USF for the first time to earn forgiveness for pre- existing arrearages by making full, on-time payments for 12 months. Winter Termination Program - protects specific categories of customers from having their gas or electric shut off between November 15th and March 15th. Lifeline Program - New Jersey Department of Human Services and provides an annual energy benefit to qualified seniors and the disabled.
- 41. Utility Assistance NJSHARES-a non-profit corporation that provides assistance to income eligible New Jersey households in paying their energy, telephone and water bills. Telephone Assistance (Lifeline Program) - The federal Lifeline telephone assistance program provides a discount on your monthly telephone bill.
- 42. Warning Signs of FinancialTrouble Missing/late payments on bills Only able to make minimum payments Unaware of current balances Maxing out credit cards Borrowing money from friends and family No emergency savings Bouncing checks/utilizing overdraft
- 43. Where to GoFor Help 211 Benefits.gov NJ.gov DCAid Benefitscheckup.org