Wealth: Asset Building
Increasingly, working families find that a steady job is not enough to cover basic necessities: One out of four working families with children is considered low income. Those who do manage to set aside some money often find it difficult to open a bank account or take out a loan: An estimated 40 million households are considered “under banked,” with limited or no access to bank accounts. Many of them turn to predatory financial institutions that charge exorbitant fees to cash checks or lend money—adding to the already high cost of being poor. Even some who rise out of poverty find themselves “asset poor,” meaning a lost job or extended illness can topple the security they’ve built.
Casey considers a family financially secure when they have: a good job with opportunities for advancement; enough resources to pay for food, healthcare, housing and other basic needs; access to good credit and financial products; and the savings to buy a home or provide for retirement.
To help low-income families reach that point, CFES invests in a continuum of asset-building programs that ensures these families receive all the benefits they’re due, addresses their debt, and protects what assets they have accrued. These all come together at the Centers for Working Families.
Before families can begin building assets, they need to ensure that they are receiving all the benefits and supportive services for which they’re eligible. Federal and state governments offer tax credits for the poor as well as a variety of programs that help pay for food, housing, childcare, and healthcare.
In too many cases, though, families don’t take advantage of these—90 to 95 percent of the families screened are not receiving one or more benefits they should. Many of these families, particularly those who have slipped below the poverty line in the recession, don’t know about benefits for which they are eligible. Others find it too difficult to apply. Casey supports programs that help families access these benefits in person and on-line.
CFES invests in a variety of programs that offer support to working families who are deep in debt or trying to build savings. Many have never borrowed, never saved or never opened a bank account. Often they turn to common “money traps”—payday lenders, “rent to own” furniture centers, “buy-here-pay-here” car lots—that exact high interest rates and don’t report successful repayment to the credit bureaus.
CFES invests in an asset and savings pathway that includes providing access to the financial products families need to save and obtain loans, as well as supporting policy that protects consumers and offers incentives to save. CFES has also developed a financial coaching model to guide families along this pathway. Counselors connect families with financial institutions willing to offer such products as small loans, secured credit cards and individual development accounts (IDAs,) or matched savings accounts. The counseling is tailored to the client’s needs.
CFES augments these efforts with a series of documentaries exploring such topics as avoiding predatory lenders, buying cars, and building up credit scores.