Reaching Households Struggling to Survive a Job Loss or Wage Reduction
Many families in today's economy are struggling with a job loss or reduced wages and are finding themselves with less money to pay the same stack of bills. Households that are going through a work-related or other financial setback may benefit from some key financial education principles. Here are some tips from FDIC staff – and examples of successes from Money Smart partners – that financial educators can use to advise working families or others trying to get by on less.
- Help people concerned about losing their home to foreclosure explore their options as soon as possible. "Individuals who are worried about losing their home should be referred to foreclosure-prevention resources, such as reputable, free homeownership counselors, and be encouraged to contact their loan servicer before their mortgage is past due," said Irma Matias, an FDIC Community Affairs Specialist. She added that financial educators may wish to partner in this effort with social services organizations for low-income households, community centers, unemployment offices, job fairs and libraries.
For example, unemployment offices throughout California are disseminating foreclosure-prevention brochures from the FDIC. Said Linda Ortega, an FDIC Community Affairs Officer, "An unemployment office is a logical place to reach people who are at risk of falling behind on payments, and at a teachable moment." Additional information on the federal government's program to help Americans reduce their monthly mortgage payments to more affordable levels is accessible at www.makinghomeaffordable.gov.
- Refer taxpayers to IRS-coordinated Volunteer Income Tax Assistance (VITA) sites, which provide free tax preparation for low- and moderate-income individuals. The FDIC partners with the IRS to help promote the VITA program, a service that also helps eligible taxpayers receive certain tax credits targeted to lower-income households. "Families who experienced a loss of income may find that they are eligible for VITA services even if they weren't eligible in past years," said Luke W. Reynolds, Chief of the FDIC's Community Affairs Outreach Section. "They should take time to get their taxes prepared regardless of how little income they had because they may be eligible for special tax credits."
- Teach people how to rebuild their career or explore new paths. Liz Myntti, the Asset Building Coordinator for an affiliate of WorkSource Cowlitz, an employment and training-related service in Longview, Washington, explained how the organization used the FDIC Money Smart curriculum and other resources to help one family who lost their small business and their home. "They completed Money Smart and small business courses and saved money through an Individual Development Account," Myntti said, referring to a matched savings program that enables lower-income people to put aside money for a goal, such as starting or expanding a small business. "They were able to reopen their small business and are in another home. The business is doing well and they even plan to expand shortly."
- Think holistically. Take into account the needs of the entire family. "Often economic stress for low-income, at-risk households fractures family relationships and increases the likelihood of poor health and learning disabilities for children," said Melissa Freel, Director of Healthy Start/Healthy Families Oakland, a department of St. Joseph Mercy Oakland hospital in Pontiac, Michigan. In partnership with the Comerica Charitable Foundation, the program uses Money Smart as part of a home visitation service for vulnerable families with infants and young children. The program, which reaches 250 families a year, is designed to help build self-sufficiency and stability.
"It's all related to financial stability," Freel added. "When families are under extreme economic stress, kids are more likely to be abused or neglected. So, we work with families to set realistic savings goals to relieve or prevent some of that stress."
- Design workshops that provide practical information that people need -- and need quickly. These programs could be offered through workforce development or unemployment centers. Also consider adding a link from the sponsoring organization's Web site to the computer-based instruction version of Money Smart or our new podcast network for portable audio MP3 players.
"One particularly relevant workshop topic in states where public assistance is paid via stored value cards instead of checks is how to properly manage stored value cards," said Reynolds. "But don't overlook other fundamentals, such as effective strategies for managing money, controlling unnecessary spending, avoiding scams, and choosing a bank account, including how to comparison shop for a free or less costly account, if necessary."
Reynolds added that the FDIC's Money Smart curriculum and recent issues of the quarterly newsletter FDIC Consumer News (find them at www.fdic.gov/consumernews) are useful resources for these workshops.
For more ideas, read the "From Poverty to Prosperity: Money Smart Success Stories and Tips for Providing Financial Education to Struggling Families," in the Summer 2008 issue of Money Smart News at: 2008 Summer Success Stories
