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Ask The Readers: How To Advise Struggling Women
By Meg | May 20, 2008
This week I will be co-leading a workshop on basic personal finance, and I’d like the readers’ input on what to cover.
This workshop is part of a program implemented by a local non-profit agency which promotes personal growth for women seeking self-sufficiency. Typically, the participants are single mothers with little personal or financial support. Many are receiving public assistance and the rest fall into the category of the working poor. They are diverse in age, education, ethnicity and goals. The common thread is that all of them are eager to create a better life for themselves and their children.
The overall program includes a job training curriculum which includes topics such as positive self-image, appropriate workplace behavior and appearance. It helps clients build self-confidence, practice effective communication skills, and establish consistent work ethics. After completing the workshops (including the one on personal finance), the women are paired with a volunteer “image consultant” who helps them select professional clothing and accessories for the workplace from the “boutique” (they get great gently used and new donations from professional women and organizations all over the city).
It’s really an amazing program, and I’m excited to begin working with it. A big theme is “women helping women” so most if not all volunteers are female, and they come from a variety of industries and backgrounds. My manager and I have signed up to be regulars for the PF seminar, and we will probably conduct one every month or so for the forseeable future.
The main point of the personal finance workshop (in my view) is to motivate and empower these women to take control of their finances. At the same time we want to give them some basic tools and strategies that they can begin to implement.
The challenge is to keep in mind the circumstances that can prevent these women from benefiting from typical PF advice. They may not own a computer or have regular access to the internet, for instance, which can impede online banking or doing extensive financial research. Many have extremelly low incomes, which makes cutting lattes an almost insulting suggestion (though perhaps there are better examples of excess spending such cable and beauty products).
Some suggested topics include what a credit score is and why it matters, avoiding bank fees, the importance of saving, budgeting, and organizing your finances. We have a sample budget to pass out and discuss, and we’ve been told many of their questions often revolve around credit scores.
I want to try not to overwhelm them with financial information, and many “typical” PF topics will either not apply or will be too advanced for these women to grasp in a one hour session. I’m thinking I’ll avoid the ubiquitous “tax advantages of a 401k/IRA” for example. Though I need to be prepared for other topics I don’t usually encounter, such as recommending a legitimate credit counseling agency (any ideas??).
There will be 12-20 women attending this 70 minute workshop. What would you stress to them?
More from Meg at The World of Wealth
Topics: Miscellaneous |
May 20th, 2008 at 12:40 pm
While you may choose to tailor the material to topics you know they’re interested in, like credit scores and how they work, please do not assume they aren’t ready for the basics of general PF advice. You don’t have to get into the tax advantages of Roth vs regular 401ks, but “Instead of a savings account that pays hardly any interest, you can save for retirement by opening a special kind of account called a Roth IRA” is both simple and relevant.
May 20th, 2008 at 12:54 pm
I attended a Dave Ramsay seminar last weekend, and I like the advice he gives to single mothers. Budget, save for emergencies, avoid debt, find a trusted person to discuss finances with, and avoid splurging on unneeded purchases because of “I had a bad day/week/month so I deserve it” mindset. There’s a lot more than that, but those are the basics.
May 20th, 2008 at 12:55 pm
I’m curious why many of their questions often revolve around credit scores…. is this because they are actively trying to apply for credit to compensate the low income?
May 20th, 2008 at 1:00 pm
I teach a similar seminar and I the following two points always resonate:
1. Build an emergency fund by paying yourself first. Have a set amount (even if it’s only $10) direct deposited to a high-yield savings account every payday (If they have internet access, ING savings is a good one, if not, their local bank branch will have some higher-yielding account options).
2. Keep your savings accounts and credit cards in your name only. Don’t give a boyfriend/partner access to anything that may eventually hurt your credit score or put your finances at risk. Even if you are married, always have at least one credit card and one savings account that is 100% your own.
May 20th, 2008 at 1:30 pm
I think patience is another good thing to talk about. I know I’ve messed up financially in the past few years as I’ve tried to pay off my credit card debt. Realizing I could forgive myself for my mistakes and move on with my repayment plan took a while for me to get, but the ability to pick myself up again was certainly important for me.
May 20th, 2008 at 1:46 pm
Great comments so far!
Andrea - I don’t know exactly why they are so interested in credit; perhaps they’ve been declined credit cards or loans, but they also could have experienced being turned away by landlords or furniture leasing centers due to low/no credit scores.
BD - I do wrestle with bringing up retirement at all at this stage; a tremendous improvement would be to save even $50 a month in savings (many of these women don’t even have jobs). But I don’t want to assume they don’t need/want retirement and investing advice either. What do you think?
Heidi - great ideas; I definitely want to address some of the relationship elements of taking care of your finances like NOT co-signing on a loan for your son/boyfriend/cousin.
Crazypumpkin - good call; I think that would be a great point to end on.
May 20th, 2008 at 2:40 pm
Regarding legitimate credit counseling agencies - you may want to research your local CCCS (Consumer Credit Counseling Services) agency. They charge $12-15 for a counseling visit and offer very sound budgeting, saving and planning advice as well as debt repayment plans when warranted. They may even have materials available for your class.
May 20th, 2008 at 2:52 pm
I was raised by a single mom who struggled to make ends meet. We were on govt. assistance for many years and it was embarassing to pay for groceries with food stamps. She never got ahead and continues to struggle financially. Luckily, I went to college and have a good paying job and am trying to teach my mom about PF. Having reflected on why it was so difficult and how she would have benefited from this type of semeinar, here are a few suggestions:
A) Create some type of top 5 or 10 list of tacticle things that can be done to improve a persons financial situation. Having at least $10 per paycheck direct deposited to an account should be #1. Psychologically they will forget that they are saving the money. #2 could be to have $10 extra dollars sent to pay a credit card company (if they carry cc debt). Obviously the theme here is to reduce debt if possible. #3 before making an impulse by write the good / service on a piece of paper and stick it to the refrigerator or 7 - 14 days before buying. Most likely after the “cooling off” period the item won’t be desired any more. #4 realize that mistakes will happen and it is OKAY! Nobody is perfect and it important to simply get back on the train. There are many more ideas that have already been put on the table. In the end the tacticle advise will be better understood and appreciated rather than theory. They will walk out with tools that can be used that same day.
B) Discuss the avenues available to increase their skill set. A huge part of the personal fniance equation is how much money is coming into the household on a monthly basis. Increasing their skill set will have a direct impact on their income potential, which will make the rest of their PF plan easier.
C) Provide an example of someone who has struggled and become financial independant / stable. I would finish with this topic because it may motivate them to get started. However, I don’t think it makes sense to provide a rags to riches scenario because that is not realistic for most people.
Thanks for participating in this seminar!
May 20th, 2008 at 3:08 pm
Something I would also include is how to spot financial scams and the like. Those in financial trouble are frequently the targets of financial scams that prey on their desperation and rob them of the little that they’ve managed to put away. I would specifically discuss such things as the work at home type scams, pyramid and ponzi schemes, pay day lenders and lotteries.
May 20th, 2008 at 6:02 pm
If they lean that way, the NRA, yes the National Rifle Association, runs a high-yield money market that returns 3.25% currently.
It is more of a “correspondence” account than an online account, so computer access wouldn’t be so important. They send you an ATM card for withdrawals (and they reimburse your ATM fees). They also send you postage paid envelopes for deposits.
Since an emergency account should be accessed little, it might make a good choice. But it is worth considering that you probably can’t draw more than $500/day from an ATM machine. It wouldn’t be appropriate for my entire emergency fund, but having $500 available at the nearest ATM could be pretty helpful, and might be all the emergency fund a person starting out could afford.
May 20th, 2008 at 6:16 pm
Here are the three topics I would focus on:
a) Credit cards. Most people struggling to make ends meet should have a credit card for emergencies only. The “I’ll pay it off later when I get some money” attitude is a big hurdle to managing PF. If you can show how much a purchase actually costs by only paying the minimum, some women will cut up their credit cards on the spot.
b) Budgeting and methods to control spending. Freeze your credit card, only carry enough cash each day for the things you know you need to buy - milk, toilet paper, lunch, bus ticket, etc.
c) Teach them that when you save money - that money actually makes money for you - be it in an account, IRA, 401K. If you save first and budget the remainder, the saved money will “work” and earn an income while they work for the next paycheck.
Forget the fancy lingo, focus on the basics and create a pamphlet to give out with resources, local brick and mortar banks you recommend, how to set up a direct deposit, etc.
May 20th, 2008 at 8:33 pm
i live in Los Angeles where we have a large immigrant population that works in the underground economy. Even legal immigrants do so. What it means is that when the time arrives, as it surely will, they will have little or no Social Security on which to retire. Spend some time explaining how SS works and that it is skewed to help the lowest paid workers.
Second, ask them what are their priorities for the class. Listen carefully, I would bet that they have questions that you or I would never anticipate.
Good luck.
Evan
May 20th, 2008 at 9:34 pm
When discussing credit cards make sure they know that if you pay your card off each month it can pay you(thru rebates like free grocery money ) not the other way around. I was stunned to find out my uncle and several of my daughter’s college friends did not know this.For some - raised in the circle of debt- this is a revelation
May 20th, 2008 at 9:40 pm
Definitely ask what they want to talk about at the beginning of class. Perhaps an icebreaker about their name and their most pressing financial issue. That will help you ensure that you give them the information that they need. Come prepared with a talk (you’ve gotten some great ideas), but be prepared to switch it up if needed.
May 21st, 2008 at 12:14 am
Please tell them not to forget their local public library! The library can provide them with free Internet access, and many branches offer free classes on surfing, how to get a free e-mail account, et c. Simple net skills would open up a whole world of information and resources, like no-fee online banking and the higher interest rates available to those who bank online. Additionally, the library can provide access to money management materials like Dave Ramsey’s books and the Dummies series (”Personal Finance for Dummies” is a favorite of mine). And if they’re looking for free entertainment for themselves and their families while they’re saving cash, the library can provide DVDs, CDs, VHS tapes, … and wonder of wonders, that old standby: books! And of course, the public library has the best resource of all: reference librarians, who can often hook library patrons up with needed local resources, services and agencies. (Why yes, I am a librarian … how did you know?)
May 21st, 2008 at 3:02 am
One thing I would give most importance is checking what all you earned in a month and where it went. This only provides all the incentive to look for ways how to spend less, cut costs and etc. So creating this desire to have control over your finances is important.
May 21st, 2008 at 6:06 am
One thing that stands out to me as an issue many lower-income and struggling women have to deal with that is less common for other groups is how to handle other family members who are struggling/asking for help.
At least in my experience, when everyone’s broke, people often come together and pool resources more than seems to happen in middle class families - and while this is in many ways a great thing, it can make it *really* hard on someone trying to break away from the pattern and pull ahead. As soon as you save a bit at all, everyone thinks it means it’s your turn to help them out - and trying to resist this involves both a lot of guilt and the practical concern that you risk destroying your own safety net, if these are the people you’ve been counting on to help you when you stumble.
It’s not necessarily something I’d bring up, but it might be worth at least thinking about, both to be prepared to answer questions about, and to see what of your prepared advice might help or be challenged by this issue.
I think the program sounds great - kudos for your work with it!
May 21st, 2008 at 7:41 am
How about creating a monthly budget on paper for the whole year? With a focus on some of the small things that can wreck it - do they owe a water bill every 3 months? How often do they pay for the newspaper? Birthday cards/gifts, animal vaccinations, and yearly vehicle registration. These are the things that don’t happen every month, but DO happen yearly. Include them in your budget. It helps.
May 21st, 2008 at 8:07 am
To motivate I would try to stress the importance of focusing less on being a victim and more on taking the challenges set in front of them head on. I would explain that yes, life that was handed to them was unfair, but complaining about it will solve nothing because at the end of the day - it will not get them ahead.
I would try to turn around their challenges into a positive. Have them look at their situation as walls put in front of them to knock down because once they do it will get easier and easier.
If they do not have internet access encourage them to be creative to find it. Their library, a friend or relative’s home. They can do it!
This go getter attitude is not only great for them, but for their children who will see mom excel with all of these forces against her.
Good luck. What a great program.
May 21st, 2008 at 8:11 am
I think the one thing most of these single mothers don’t fully comprehend is that children are expensive. I met one woman who felt that public assistance would provide enough money to cover the cost of a child. In reality, it falls far short. And father’s can’t always be counted on to provide child support. There is the issue of budgeting for day to day living but also recognizing that delaying a family until they can afford it is key part of planning. Also, I’d strongly recommend that they pursue their education. Education leads to better paying jobs.
May 21st, 2008 at 9:12 am
Some other thoughts
Even though the circumstances of their lives may be difficult you can’t stress enough the importance of a positive attitude as they embark on making changes in their lives. Every change they make that sticks shifts them into a new place and it’s in that place that they can make more positive changes. It’s incremental and iterative.
Another thought is to try to find a person of trust to whom they can go when they need help or advice.
May 21st, 2008 at 10:42 am
These are really great insights; thank you! I especially will mention the library (our city has one of the best/biggest in the country). I was stunned to find out they have as many DVDs for rent as the local blockbuster!
And I’ll think about mentioning how to deal with struggling family members - how it’s important to distinguish “helping” from “enabling.” That IS a toughie, though, to be sure.
Remembering annual expenses is a great point, too, and asking them what they want to know (and leaving plenty of time for Q&A) will probably be the best thing.
I’ll let you all know how it turns out!
May 21st, 2008 at 11:12 am
Sadly, advising them to save money while on TANF will work against them. If they go over a certain amount in savings (under $2000 in most states) they will lose access to benefits, including food stamps and Employment-Related DayCare (ERDC).
But I would concentrate on daily budgeting, saving on food–including using coupons, and cutting back on utility expenses.
May 21st, 2008 at 11:37 am
I would stress that developing the habit of saving for yourself is very important…even if you can only save $10/month it is still very much worth it.
May 21st, 2008 at 11:57 am
I would start with spending. Differentiate between needs and wants. Try to make them understand they have *choices* as to how they spend their money. Make them question their basic assumptions about themselves. Show how convenience costs money. Don’t use the B(udget) word, talk about spending plans. How many times have people asked for help with setting up a budget? As simple as that sounds, they are clueless because they never analyzed their spending.
Next, talk about banking. Explore the use of free checking. Discuss the downside of check-cashing places and payday loans.
I don’t think these people should even consider credit until they can control their spending
May 21st, 2008 at 12:25 pm
I am a single Mom. I divorced when my children were 4, 3 and 1 years old. When I was married, I was a stay at home Mom.
My children are now, 18, 17 and 14 (well almost 15).
Here is my story…
My exhusband was an abusive alcoholic. He never asked for any share of custody. I had, and still have very FULL custody of our three children.
Do you best to ASK for and enforce child support.
Children have alot of expenses over the years.
Do not have so much pride (you don’t need money from HIM, you can make it on your OWN, etc etc)
that you won’t pursue child support.
Your child(ren) deserves to be supported by BOTH of their parents.
Get any assistance out there that is available to you and your children.
I can’t name the numerous amount of people that have helped out me and my kids over the years.
Here are a few ideas:
Childcare is very expensive. Consider requesting scholarships/paying on a sliding scale/getting government subsidies for paying for it.
The Boys and Girls club and the YMCA in my area have childcare on a sliding scale.
Many summer camps also have camperships for older kids, as well as you do fundraising for them, and your kid gets to go to camp for free, or very little $.
Work out a budget …and save something…I used to save only $25 per month…but something is better than nothing.
Need a break from the kids, exchange babysitting…one Friday evening,with another single Moms kids, and vice versa.
If your family wants to help you out, let them.
When the time rolls around look into programs for first time homebuyers. I really thought we would always be living in a dumpy two bedroom apt. I own a modest home–bought it 9 years ago. It is POSSIBLE. Take a class on first time home buying.
If you can, don’t go grocery shopping with your kids. You’ll be cranky, they will be cranky, and you’ll overspend.
Use the library for free resournces, as well as dvd rentals.
Shop at yard sales for your younger children. They won’t know the difference, and when they are young, they don’t wear out their clothes since they change sizes so frequently.
Breathe. Take it one day at a time. Take it one hour at a time when you need to. Concentrate on one thing at a time. You can’t do anything well, if your mind is not on the subject at hand.
Good luck. You will preserve and your kids will too.
May 21st, 2008 at 12:37 pm
I wanted to add to my post…
When I got divorced, I was receiving food stamps, my kids were getting medicaid, my daughter was in HeadStart, we lived in a cr@ppy two bedroom apartment, I had a 1977 bomb of a car and no $$.
Now, we are not rich by any means, but after going back to college (got a Pell grant), got my current job (have been here for 11 years), bought a house (9 years ago), have almost $100K in a retirement account, am working on fully funding my e-fund, have a paid for decent car, am on no public assistance whatsoever (haven’t been for many years), and we took a vacation to Maui last year.
So you can do it. It ain’t always easy, but you can do it!
May 22nd, 2008 at 1:21 am
If it was me having to give this deal, I would start focusing on the basics of proven financial principles to build stability in their life that they can build on later. The biggest thing hurting people in these situations is that they are often so financially beat up they have lost their hope. By teaching them some easy to understand and use principles (Like Dave Ramsey’s Total Money Makeover for example) will show them that its possible to recover and even eventually thrive. That there is a light at the end of the tunnel thats not an oncoming train. I’d start there before anything else. If you can inspire them and give them confidence then point them to information they can dig in to later as they begin to rebuild, will do ALOT for them. I know when my own stupidity caused me to go broke a few years ago, I was so beat up and slammed around that I felt like I couldnt win…and I just continued to spiral into financial death. Until I was motivated by being shown I “could” win if i did the right things and gave them time to work.
Instill HOPE first.. Then work on the HOW and WHY.