By Essence Smith, Project Manager, Partners for Rural Transformation
Financial education and financial literacy are two of the lesser discussed keys to financial independence mentioned in the industry. Understanding concepts of saving, investing, and debt typically leads to an overall sense of financial security and self-assuredness, not to mention healthier livelihoods. Since our inception, Partners for Rural Transformation (PRT) has strategically worked towards increasing capital flow in rural persistent poverty areas. One of the integral parts of this strategy is being present as some of our constituents’ few local banking, lending, and financial education options. April is National Financial Literacy Month, and our team at PRT is celebrating by highlighting our members and some of the extensive work they are doing to educate individuals and families nationwide.
In the Rio Grande Valley, residents are no stranger to housing insecurity. The journey to homeownership is wrought with complications and hurdles. For come dream. come build. (cdcb), one of the biggest hurdles for their constituents is a lack of credit knowledge. The families they work with often have misconceptions and a lack of understanding of how bad credit affects options for home buying, loan securing, renting a home, etc. Enter cdcb’s Financial Security. This program educates the community on financial challenges they may face through hands-on guidance and training from certified housing advisors and financial coaches. Financial Security centers its training and message on financial capability – the ability to navigate life’s events. Initial courses start with learning the basics of personal and home finance. Upon graduation from said courses, cdcb’s financial coaches continue to mentor their clients to ensure long-term success. The Financial Security program sets its clients on the right path to achieving these milestones with training beyond setting financial goals. Financial Security’s programming includes managing household and individual finances, adjusting daily spending, developing a savings plan, etc. Creating an environment for their clients to ask and be prepared to receive answers to overwhelming financial questions is key, and cdcb surely does so.
Words from an expert: “As a Housing Advisor I feel a great responsibility to help our clients become financially literate to lower their chances of falling into predatory practices. By teaching them to balance a checkbook, checking their credit score, and creating budgets, we’re empowering them to make choices that will help them build wealth.” – Claudia Kowalski, Senior Housing Advisor, cdcb.
Small business owners handle every aspect of the business, and without local, sustainable support, that burden gets overwhelming. In response, Communities Unlimited’s (CU) Entrepreneurship Team built an on-demand e-learning center, CU eCenter, offering courses in five areas, including accounting and finance. A small business may provide an excellent service or product; often, they are unfamiliar with financial statements or accounting. An entrepreneur may get in over their head with credit card debt or fall prey to predatory lenders. They might not know how much money the business brings in or how it is spent. Some may never have applied for a small business loan to start, grow, or course-correct their business. The CU eCenter helps small business owners learn the information needed to take that next step. The eCenter is currently open to Communities Unlimited’s Community Development Financial Institution (CDFI) partners to educate potential and future borrowers. The e-learning center will soon be available to all small business owners wanting to learn more about operating a financially sustainable business. New courses are added and updated regularly, continuing to benefit small business owners in CU’s service area.
Words from an expert: “Business Financial Literacy is important because it is essential to establishing and growing a financially sustainable business.” – Cynthia Terry, JD MBA, Director of Entrepreneurship, Communities Unlimited
Much like its Partner organizations, Fahe understands the multifaceted nature of financial education. At Fahe, they take a leadership approach by serving member organizations. Fahe Members who participate in financial literacy programs fall under three main types of organizations: housing authorities, community action agencies, and organizations with counseling services as their primary activities. More than 40% of Fahe Members provide financial literacy education to their clients looking to become homeowners, seek better budgeting skills, educate themselves to take advantage of referrals and programs and assess job opportunities to improve their earned income. This serves the organization and the client, but it also creates a symbiotic and sustainable relationship overall. Within Fahe membership, three rural Financial Opportunity Centers exist, working with LISC’s model that provides clients with connections to income support, financial coaching services, and employment coaching. Financial literacy goals are to increase net income, increase net worth, improve credit scores, and increase earnings.
Words from an expert: “To help people reach the American Dream it is critical that they have the opportunity to build household wealth and tools make it a reality”- Jim King, President and CEO, Fahe
At HOPE, nearly one out of every two members was either unbanked or underbanked before joining the HOPE Credit Union. As a result, the organization often finds itself in a place where it must bridge the capital and information gaps. Whereas people with resources hire private bankers to fill the role of financial problem solver, HOPE takes the same approach with its members. Plans range in complexity from refinancing a predatory car loan to free up monthly cash flow, to mapping out a credit path for someone formerly not banked to qualify for a mortgage. Emerging entrepreneurs engage HOPE’s lending team to walk through the calculus of borrowing money to start a small business in the first place or how quickly to expand. These services are available through HOPE’s network of Financial Inclusion Officers, Small companies, Mortgage, and Retail staff in its five Deep South states. As evidenced by the Credit Union, capital and advice work hand in hand to advance the sustainability and impact of not just HOPE but also its members.
Words from an expert: “At HOPE, we focus less on saying no and more on saying not yet, and let’s develop a plan, together,” said Felicia Lyles, HOPE Senior Vice President of Retail Operations.
Financial education is an integral piece of the historical and current systemic oppression around access to capital for Native communities. Consistently present and result-oriented, Oweesta launched and operated its Financial Coaching for Families program to offer a solution to this issue. Fundamental Native values such as honesty, listening, generosity, respect, and connectedness are also the essential foundations of Oweesta’s coaching. In their work, the coaches support clients’ self-leadership drawing on their innate wholeness, resourcefulness, and creativity to move towards the goals that they have for themselves. There is a lack of access to physical banking institutions and broadband internet services within remote reservation communities. The communities with access to financial institutions are often faced with racially insensitive policies, despite the legislative efforts to correct these practices. Given this context, Native Communities are disproportionately challenged in creating generational wealth and passing down financial management knowledge to future generations. Financial education is essential for Native communities because we build the foundation for lasting generational economic sustainability. Unfortunately, financial education is not the overall solution to the barriers of financial inequality for Native communities; it is the stepping stone to the long path of creating equity in the United States’ economic system. Oweesta’s financial coaching program teaches clients how to have difficult conversations surrounding lending, homeownership, owning their businesses, etc. To learn more, register for Oweesta’s Native Financial Education Practitioners Summit (April 25-28, 2022) and enhance your financial education programming in Indian Country.
Words from an expert: “Our traditional cultural practices are rooted in sophisticated resource management. When we bridge these practices with western financial management, as seen in the Building Native Communities suite of financial education curricula, Native families take traditional skills and modern financial language to navigate the western economic systems.” – Senior Programs Officer, LaSalle Smith
Financial literacy is a vast subject with several applications – as shown by Rural Community Assistance Corporation’s (RCAC) Housing and Small Business Coaching programs. RCAC’s housing counseling program builds partners’ capacity to provide financial literacy training to housing counselors through HUD Core Competencies classes. Housing counselors guide clients through a pre-qualification process, calculating income and debts, addressing barriers to their goals, and budgeting. Many counseling agencies teach financial literacy classes as part of their requirements for homeownership. While in the small business vein, RCAC’s Building Rural Economies Small Business Coaching team provides no-cost direct technical assistance to rural entrepreneurs and small businesses to launch or re-launch their businesses, operate, sustain, and grow their businesses, secure access to financing and build networks. Tailored services include financial analysis, business plans, and understanding financials and cash flow projections.
Words from an expert: “Financial literacy is an integral part of housing counseling. As we work with clients on their budget and credit, they are often unaware of existing issues and don’t know what steps to take to correct them. Helping clients learn how to make payments on time, keep balances low, get on a savings plan and follow a budget can create lifetime benefits for them and their families,” said Debie Baranchulk, Program Coordinator, RCAC Housing Programs.
“For many rural entrepreneurs, especially those in impoverished areas, starting a business may be a necessity…the risk of a failed business has consequences beyond a financial loss – foreclosure, bankruptcy, and even their ability to get their next meal might be at stake. These skills will also directly translate into their ability to understand and grow their businesses – an entrepreneur who can build a personal budget can probably also figure out how to build a business budget,” said Bo Blodgett, RCAC Rural Development Specialist, Economic Development
The elimination of persistent poverty relies on changes from within communities. Partners for Rural Transformation’s work focuses on changing mindsets from ones that “wait for assistance” to an entrepreneurial mindset that is seeking opportunity. Whether they are elected officials, community leaders, or residents, people with an entrepreneurial mindset develop solutions to local problems and seek out the resources to help them succeed.
Although we realize our families are facing complex social realities, our shared community-grounded experiences reveal that the families we serve are contagiously hopeful, persistent in their pursuit of better opportunities, entrepreneurial in financial endeavors, resourceful in how they leverage social and financial capital, creative in their approach to challenging the status quo, and resilient in the face of formidable opposition, which includes market trends and structural inequalities beyond their control.