Learning to save gives lower-income workers peace of mind

LouAnne Jordan was never comfortable with her finances, working hard but not really sure where all her money was going.

“Like a lot of people, I don’t have a high income. In my mind, there was never any extra money to save,” says Jordan, who loves her work as the event and exhibit coordinator at Grovewood Gallery in Asheville.

Last fall, Jordan signed up for a pilot program with OnTrack Financial Education and Counseling that teaches lower-income workers how to save their money for emergencies, create better credit scores and improve their long-term stability.

Through six months of budgeting classes and counseling, Jordan was among 48 participants who received a $3 match for every $1 they saved, up to a full match of $540.

“I discovered I had more money than I thought,” Jordan says, after she learned how to budget her income and expenses. And she began to save more in her monthly budget.

Now in her mid-50s, Jordan has amassed $3,000 in a Self-Help Credit Union savings account and is looking to build her first home.

Many workers struggle with lower wages paid in Asheville than in other metropolitan areas in North Carolina. More than a third — 37 percent — of the county’s residents were low-income on average from 2010-14, meaning their incomes were less than twice the federal poverty level, which topped at $47,700 for a family of four in 2014, according to data compiled by the N.C. Justice Center.

And the recovery has not been good to their income. Buncombe’s hourly median wage of $14.49 equaled 92.7 percent of the state median wage of $15.63 in 2015. Workers have seen the median hourly wage fall by 45 cents since the recovery began in 2009.

Many are having a hard time making ends meet with groceries, rent, utilities, gas and other monthly necessities. When emergencies come up, from flat tires to car troubles, they may turn to credit cards or high-interest loans online to meet expenses.

Banking at least $1,000 for emergencies can provide financial peace of mind, says Celeste Collins, OnTrack’s executive director.

Many financial planners suggest having an emergency fund of three months of living expenses, but Collins says many lower-income workers find that figure out of reach.

“Studies show that having $1,000 can get people over the bump of most emergencies,” Collins says.

Without any cushion to fall back on, many workers will get desperate and turn to pawn shops or online loans at a high interest rate.

But setting aside even $1,000 remains a hurdle for many workers. A survey of 5,000 workers in 2015 showed that only 62 percent had $1,000 in savings, according to the online financial group GOBankingRates.

The trend in 2016 was not promising, even while the economy and unemployment numbers improved. A second survey of 7,000 people showed that 69 percent had less than $1,000 in savings.

Those surveys found that lower-income adults are the least likely to have money in savings. Of those earning less than $25,000, 38 percent reported zero savings, while another 35 percent have less than $1,000 saved.

During the Great Recession, OnTrack spent much of its counseling efforts trying to keep homeowners out of foreclosure during layoffs and job losses. But OnTrack also wanted to find ways to help lower-income workers before they faced foreclosures or bankruptcies.

Last year, OnTrack applied for and received a $50,000 grant from the Community Foundation of Western North Carolina to launch the program Savings for Emergencies and Credit to Unlock Resilience and Empowerment, or SECURE, for short. OnTrack targeted households struggling to make ends meet with bills and monthly expenses.

That proactive approach to helping lower-income workers before they hit a financial emergency is critical, says Virginia Dollar, senior program officer for the Community Foundation of WNC. “They have no savings. If anything happens, if their car breaks down or if they’re sick and they miss any work, they have nothing to fall back on. They may not be able to pay their rent or buy food.”

The problem of unexpected car repairs is aggravated in Western North Carolina with its lack of reliable public transportation for many low-income workers, Dollar says. “They are dependent on cars. If you’re low-income and you have a flat tire and you have no money to replace the tire, it just cascades into other problems.”

Some 91 clients signed up initially for the enrollment workshops in July, pledging to put money in accounts opened at Self-Help Credit Union over the next six months with the incentive to triple their savings with the matching funds.  By December, only 10 had dropped out.

Altogether, the pilot program participants were able to save $15,137.

Opening up a new account at a credit union helped them sock away the money. Without a debit card associated with the account, they couldn’t readily tap into those funds, many participants told Anthony Jimenez, the SECURE program’s coordinator and education director.

More than just giving out matching money, the program requires participants to take a series of classes and counseling sessions.

“It’s about teaching individuals how to manage money, how to budget and how to be smarter in their choices,” Dollar says.

One survey respondent told Jimenez, “The one-on-one personal follow-up meeting helped me fine-tune my budget. I now look at tracking expenses as a positive part of my life rather than looking at it as constricting.”

Jordan appreciated the financial counseling that OnTrack offered and the tips on building up a better credit score.  Jordan started a few years ago with OnTrack with a credit-building class.

“Through the SECURE program, I learned how to budget in for savings, for getting your car fixed or house repairs. I have a budget that I work out every month,” Jordan says. “I’ve been able to save a chunk and now I’m getting ready to build my first house. I always dreamed of owning a house. I’ve seen dreams come true.”

OnTrack’s outreach with financial counseling and common-sense budgeting makes the nonprofit a vital resource in the community, Jordan says. “They are changing people’s lives and futures. They give people hope and confidence.”

Meanwhile, OnTrack is looking to expand the SECURE matching fund program for a second year, Collins said.

“We want to get rid of that stigma that many people still feel about talking about money or debt or budgeting. I think there’s a real relief and peace of mind when they know they have a little savings to fall back on,” Collins says.

For more information about OnTrack Financial and Counseling’s Savings for Emergency and Credit to Unlock Resilience and Empowerment and other programs, call 828-255-5166 or click on www.ontrackwnc.org