Developing Money-Management Skills through Education and Training
Needs
Work First participants need knowledge, skills, and attitude changes to become effective money managers--to make better decisions on how to use their money; to develop skills in budgeting and record keeping; to think before spending money that is needed for true necessities; and to select and control the use of a checking account and debit cards. If participants acquire this basic knowledge and skill, they can live within the income available to them and reduce the stress that is caused by financial worries. Participants need to learn how to shop more effectively in order to "free up" money to establish the savings habit that can help them reach selected long-term goals--all of which will help them focus on their jobs and increase their productivity.
Concerns
We are bombarded with evidence of poor money management skills among the general public. Credit is now used more often than ever and 40% of it is not paid off promptly, resulting in higher finance charges over a longer period of time. Bankruptcies topped 1 million in 1996, a new record, with a lower average income among those filing -- persons tempted by supposedly pre-approved credit offers. For many years, the greatest cause of friction in families has been over how money is used. The issues invoved are greater than just the mechanics of budgeting and record keeping and involve interpersonal dynamics and power struggles that must be addressed as well in order to improve the financial situation.
The public as a whole does not handle cash flow and credit control effectively, as is reflected in recent savings levels of less than 5% --despite the obvious problems caused by the lack of everyday money management and the obvious need for greater personal savings and investments for future financial security.
The challenge to help Work First families is also great. But effective training is critical if families are to reach the goal of self-sufficiency. Further compounding the difficulty in meeting this challenge is the common problem of limited skill in reading, math, and in some cases English.
Community Response
Community leaders need to figure out how to assess the level of money management knowledge and skill among Work First participants and enlist the help of personal finance educators and others in recruiting and training professionals and volunteers to help participants develop the attitudes and skills they need in trying to achieve self-sufficiency in both the short and long term. Employers may become advocates of personal finance education for employees if they are shown the results of recent studies from Virginia Tech of the positive impact on employee attitude and productivity of such training (Garman 1997).
Strategies
1. Check Local Educational Opportunities
Work with Extension Agents for Family and Consumer Education programs, Community College educators and counselors, and other educator or trainers to determine current community resources (human, print, audio-visual, space, funds) for teaching money management. List the current educational opportunities for Work First families, and plan ways to strengthen those offerings to meet the needs of Work First participants and employers, such as a series of workshops that encourage take-home practical activities (at DSS, community centers, churches, and other learner-friendly settings); work site lunch programs or released-time training; and individual counseling.
2. Educational Materials
Collect printed and visual resources for teaching money management training to include exercises on such skills as:
• Learning to work out family differences on how to use limited amounts of money.
• Making a realistic spending plan and keeping records.
• Shopping more carefully to reduce unnecessary spending.
• Taking care of things so they last longer.
• Using credit in ways that protect your credit record.
• Getting the savings habit.
Locating good resources is not enough. Each community must design strategies for reaching the audiences who would benefit from the information in the educational materials.
3. Employers
Work with employers to design work site training that is adapted to meet specific audience needs. Consider whether incentives to take part and reach successive goals can be incorporated into the program. Encourage employers to help eligible employees take part in the Earned Income Tax Credit program on a monthly basis rather than once a year.
4. Community Groups
Work with churches, community groups, Habitat for Humanity, and other nonprofit organizations to expand the corps of volunteers to provide mentors or other forms of reinforcement to Work First participants as they develop their skills in money management. Consider the model of peer counselors in Cornell Universityâs Building an Understanding of Credit Services Program (BUC$).
5. Consumer Credit Counseling Service
Contact the nearest Consumer Credit Counseling Service (CCCS) and find out current workloads for budgeting education, credit counseling and debt management for serious cases of overextended credit. If your area has no CCCS or inadequate service, try to create that resource for your community. (See section XIV on credit counseling.)
6. Individual Development Accounts
Monitor the pilot testing of IDAs--Individual Development Accounts--the new way in which lower-income families can save money (without losing asset-limited benefits) in a special account with matched funds from public or private sources. The use of these IDA funds will be restricted to purchasing a first home, investing in ones own business, or paying for higher education or training. Helping Work First participants reach these long-term goals will open up additional candidates for community or work site education on pre-homebuyer and post-homebuyer education, on planning for the operation and financing of a small business, and on getting the most for your training dollar.
