[PDF] - A Word of Thanks to the Organizations that Fund Our Work U.S. PDF Document

SLIDE 1

The Role of Financial Well-Being

n the Road to Recovery

Judith A. Cook, PhD Professor & Director

University of Illinois at Chicago, Department of Psychiatry National Research & Training Center on Psychiatric Disability

A Word of Thanks to the Organizations that Fund Our Work

U.S. Department of Education, National

Institute on Disability & Rehabilitation Research

Substance Abuse & Mental Health

Services Administration, Center for Mental Health Services

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Financial Literacy

Asset Accumulation

Two Tools for Building a Secure Economic Future

Financial Literacy Financial Literacy

SLIDE 3

Low Low-

Income People in

Income People in Recovery May Feel Financial Recovery May Feel Financial Planning is Futile Planning is Futile

“ “I just sat down the other day and

I just sat down the other day and wrote out checks with which to pay wrote out checks with which to pay my bills and find out I my bills and find out I’ ’ve already ve already spent my money before I even have spent my money before I even have

it. There was no fat to trim, nothing
it. There was no fat to trim, nothing

to budget. to budget.” ” Woman in Chicago Woman in Chicago

A Fatalistic View Can Get in the A Fatalistic View Can Get in the Way of Planning Way of Planning “ “I think when I have money, I think when I have money, ‘ ‘You You know what? I may not be here know what? I may not be here

tomorrow. Look at my friend who
tomorrow. Look at my friend who

passed away suddenly. passed away suddenly.’ ’ Then I Then I don don’ ’t care about the end of the t care about the end of the month. month.” ” Man from Georgia Man from Georgia

UIC NRTC Free Financial Education UIC NRTC Free Financial Education Curriculum Curriculum

– – Lesson 1: What Lesson 1: What’ ’s Important to You s Important to You? ? values, needs vs values, needs vs wants; identifying financial goals, budgeting wants; identifying financial goals, budgeting – – Lesson 2: Income vs. Expenses Lesson 2: Income vs. Expenses difference between difference between fixed vs. flexible expenses; developing a savings plan fixed vs. flexible expenses; developing a savings plan – – Lesson 3: Managing Your Debt Lesson 3: Managing Your Debt controlling debt, how controlling debt, how to increase your income, 101 ways to save $ to increase your income, 101 ways to save $ – – Lesson 4: Understanding Credit Lesson 4: Understanding Credit understanding your understanding your credit report; managing credit/debt problems credit report; managing credit/debt problems – – Lesson 5: Using Financial Institutions Lesson 5: Using Financial Institutions checking & checking & savings accounts, direct deposit, debit cards, savings accounts, direct deposit, debit cards, using ATMs, online banking, bank loans using ATMs, online banking, bank loans – – Lesson 6: Building Consumer Skills Lesson 6: Building Consumer Skills smart smart shopping, spending traps, spotting fraud, shopping, spending traps, spotting fraud, consumer rights consumer rights

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UIC Curriculum Adapted From…

All My Money: A Financial Management

Curriculum for Persons Working with Limited-Resource Audiences

http://www.ace.uiuc.edu/cfe/mymoney/

Your Money & Your Life: A Financial

Education Curriculum for Limited- Resource Audiences

https://pubsplus.uiuc.edu/ACE-4-CD.html

University of Illinois Extension

Lesson 1: What’s Important to You?

Your values
Distinguishing between needs vs. wants
Identifying your savings goals

– short or long term? – getting out of debt? – saving up for a purchase (big or small)? – 6 steps of decision-making

Tracking expenses

– Different ways to track your expenses – Knowing when your bills are due

Fun Quizz: What Type of Buyer Are You?

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Learn How to Track Your spending Ways to Track Spending

Spending Diary – write it down in a small

notebook or say it into a voice recorder

Collect Your Receipts – get a receipt for each

purchase & total them weekly

Use Expense Tracking Worksheets – assign

purchases to categories at the end of each day via free paper & pencil or excel worksheets

http://www.frugalvillage.com/printables-othermenu/31-printable-daily-expense- tracking/117-printable-expense-tacking.html

Use Online Budget Tracking – you can
btain a free system called “Budget Tracker”
n the Internet http://budgettracker.com/login.php

Monthly Budget Worksheet Sample

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Lesson 2: What’s Important to You?

Fixed vs. flexible expenses
Envelope budgeting
Developing a savings plan

Build a Savings Plan by Understanding Fixed vs. Flexible Expenses

Fixed

Housing
Utilities
Credit payments
Loan repayment
Insurance payments

Flexible

Food
Household
Health
Transportation
Recreation/Entertain

ment

Personal
Contributions

Envelope Budgeting

Good for people with limited income who
perate on a cash basis
Good for folks who don’t like math ☺
Important to make good “guesstimates”
f how much to put in each envelope
Start with just a few envelopes and add

more over time

Keep envelopes in a safe place –

preferably a locked box or drawer

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Envelope Budgeting Example

Using Online Finance Calculators to Develop Savings Plans

How much do you spend each month?

http://frugalliving.about.com/library/Budget_Calculator/bl_budg etcalculator.htm

What will your savings be worth over

time?

http://partners.leadfusion.com/tools/uiue/savings02/tool.fcs

What will it take to make a large

purchase (used car, condo)?

http://partners.leadfusion.com/tools/uiue/savings03/tool.fcs

!

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Lesson 3 – Managing your Debt and Expenses

Controlling debt
Saving money
Increasing income
Calculate income-expenses

Know Thy Bills

Make a list of all bills (rent/

mortgage, utilities, phone, doctor, credit card, other charge cards)

List the amount due, when due, interest

rate, amount owed (helps you see all your debt at once)

Make a payment calendar for the month

& year (helps you see when each bill is due & how it fits with other expenses)

Prioritize Your Bills

Most important is housing
Next most critical is utilities (electric, gas)
Transportation & insurance come 3rd
Bills that cost money if they are not paid

come next (late penalty, disconnect/reconnect charges, repossession

ptions)
Bills likely to be “vigorously” collected come

Learn to Spot Spending Traps

Rent-to-own stores
Payday lenders
Pawn shops
Online shopping
Mail-order clubs
Auto-purchase
Buying parties

Lesson 4: Understanding Credit

What is credit?
Your credit report
Understanding your credit score
Managing credit problems

Pitfalls of Using Credit Cards

Credit card companies make money by

encouraging you to take on more & more debt

Initially low credit card interest rates are

called “teaser rates” because they always increase

Spending on credit gives the illusion of

“free money,” misleading people by leaving them unaware of how much they are spending

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How Long Will It Take to Pay Off Your Credit Card?

Credit Card Repayment Calculator http://www.federalreserve.gov/creditcardcalc ulator/

Once a year, U.S. citizens have the right to a

free credit report (or within 60 days of being

denied credit)

AnnualCreditReport.com is the ONLY authorized

source for the free annual credit report that's yours by law. The Fair Credit Reporting Act guarantees you access to your credit report for free from each of the three nationwide credit reporting companies: Experian, Equifax, and TransUnion.

Free Credit Reports

Understanding Your Credit History/Score

Your Credit Report Credit bureaus collect information on your use

f any form of credit

including rent, liens, bills, mortgages, credit cards, bankruptcy Negative info stays on report for 7 years Any business or creditor who subscribes can access this information Your Credit Score Score is calculated by applying a mathematical formula to information in your credit history Lenders use score to determine whether to loan you money & how much interest to charge

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Like everyone else… Lesson 5: Using Financial Institutions

Why use financial institutions & how to

choose one (banks, savings & loans, credit unions)

Checking accounts
Savings accounts
Opening an account
Electronic banking
Loans

Problems for People who are “Unbanked”

Difficult to establish a credit

history

Unable to use online banking-

direct deposit, online bill paying, electronic statements

Forced to pay fees for check

cashing & other financial transactions

Unable to procure bank loans
Unable to earn interest

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Considerations in Choosing a Financial Institution

Does it offer the services I need?
Is it conveniently located?
Does it have convenient hours - evenings & Saturdays?
Does it have ATMs? Are they located near where I live,

work, & shop?

Will I earn interest on money in my account?
Do the employees speak my preferred language?
Is the institution insured?
Am I eligible to join a credit union?
Will it help me develop a bill payment & credit history?

Financial Education Course Evaluation: Pre-Post Test Results

Statistically significant increases (p<.10 by 2-tailed significance

n paired-t-test) were observed on:

How often do I... – Write down my financial goals. – Write out a spending plan that includes savings for goals and emergencies. – Use coupons. – Keep track of my spending. On a scale from 1=not comfortable to 5=very comfortable... – What is your comfort level with your knowledge of financial terms and concepts? – What is your comfort level with applying what you learned to your behavior?

“I am so aware now [about] what I am buying or

what I am choosing not to buy. I use to go on sprees, now I am choosing not to waste money or

verspend. I make mistakes sometimes but now I

track expenses all the time. I am also more aware

f credit card debt.”
“This course was a mirror and I’ve now begun to

pay more attention to my spending.”

“I am saving in an envelope for vacation. And

earned money by selling two things I don’t use.”

“I am now more motivated to address my debt,I’m

working on agreements to pay off debt and I have a better understanding of my financial situation.”

In Students’ Own Words…

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Asset Accumulation Asset Accumulation

Assets are Key to Transcending Assets are Key to Transcending Poverty Poverty

It is assets, not income, that allow people

It is assets, not income, that allow people to move out of poverty and achieve to move out of poverty and achieve economic independence. economic independence.

One in 5 Americans does not have

One in 5 Americans does not have sufficient assets (e.g., savings, home sufficient assets (e.g., savings, home equity) to survive at poverty level for three equity) to survive at poverty level for three months should they lose their income. months should they lose their income.

Corporation for Enterprise Development (CFED)

Corporation for Enterprise Development (CFED)

Asset Accumulation has Documented Psychological Benefits in Addition to Economic Ones

enhanced personal efficacy
greater personal control
feelings of empowerment
future orientation

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Individual Development Accounts Individual Development Accounts (Federal IDA Program) (Federal IDA Program)

Individual saves

Individual saves earned income earned income for 1 for 1st

st home,

home, small business capitalization, or post small business capitalization, or post-

secondary

secondary education (MUST be $ from a job) education (MUST be $ from a job)

Income must be below 200% of poverty level to

Income must be below 200% of poverty level to qualify (<$20,800 family of 1) qualify (<$20,800 family of 1)

Savings not counted against SSI/SSDI check

Savings not counted against SSI/SSDI check

Individual must receive financial education

Individual must receive financial education

Individual

Individual’ ’s contribution is matched by federal & s contribution is matched by federal & non non-

federal sources

federal sources

People must save for either: 1) a home; 2)

People must save for either: 1) a home; 2) post post-

secondary education; 3) starting their own

secondary education; 3) starting their own business business

Person Deposits $20 Federal Government Matches $20 Local Bank or Philanthropic Organization Matches $20 Person Now Has $60

How IDA Asset Accumulation Works

$20 + $20 + $20 = $60

IDA Programs – Savers with Psychiatric Disabilities

http://www.cmhsrp.uic.edu/download/NRTC4.IDA%20Project%20Report.10.25.10.pdf

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New Hampshire

Two programs: Dollars & Sense Credit Union

Demonstration Project; Volunteer Income Tax Assistance & Financial Education Study

State universities coordinated the programs as

part of research studies: U of NH; Southern NH University

4 savers in recovery in each program
3:1 match (Dollars & Sense), 4:1 match (VITA)
New Hampshire Community Loan Fund

provided the match

Banks: Northeast Credit Union (Dollars &

Sense), Citizens Bank (VITA)

1 saver matched (Dollars & Sense) for a micro-

enterprise, 2 matched (VITA) for post-secondary education & a micro-enterprise

New Jersey

Collaborative Support Programs of New

Jersey Peer-Run Program

Based at a peer-run self-help center
41 savers in MH recovery
4:1 match for advanced education & micro-

enterprise development; 2½:1 for home

wnership
Local match from state MH authority &

Wachovia Bank

Commerce Bank held IDA accounts
Outcomes: 19 savers matched, 3 homes, 9

degrees, & 7 micro-enterprises

Louisiana

Mental Health America of LA IDA Program
Based at a national mental health advocacy
rganization’s state affiliate
10 savers
2:1 match
Local match from State Office of Mental Health
Chase Bank
9 savers matched, 1 micro-enterprise, 9 home

repair purchases

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Alaska

Cook Tribal Inlet Council IDA

Program

Based at a social service agency for Alaska natives (in

their Employment & Training Services Department)

246 participants (savers with MH/SA disabilities & their

family members)

5:1 match
Local match from the Alaska Mental Health Trust

Authority

Wells Fargo Bank
107 savers matched, 53 home purchases, 44 post-

secondary education, 10 micro-enterprises

Illinois

UIC/Thresholds IDA Program
Run by a state university research center

& based at a community mental health center’s supported employment program

5 savers
2:1 match
Local match from the Rebecca Susan Buffett

Foundation

Charter One Bank of Chicago
3 savers matched, 1 micro-enterprise, 2 post-

secondary education

Ongoing Assistance for IDA Holders Ongoing Assistance for IDA Holders

Help monitoring monthly deposits,

Help monitoring monthly deposits,

Quarterly meetings to review progress, provide

Quarterly meetings to review progress, provide support, & celebrate achievements. support, & celebrate achievements.

If people lose their jobs, help to find new ones. If

If people lose their jobs, help to find new ones. If they have financial emergencies IDA savers can they have financial emergencies IDA savers can forego savings for a brief period. forego savings for a brief period.

Financial education re: the IDA goal (low

Financial education re: the IDA goal (low-

income

income home ownership financing, choosing and home ownership financing, choosing and enrolling in post enrolling in post-

secondary school, creating a

secondary school, creating a business plan & budget for a micro business plan & budget for a micro-

enterprise).

enterprise).

Assistance making asset purchase and ongoing

Assistance making asset purchase and ongoing support as needed. support as needed.

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Summary of Lessons Learned by Programs

Savers in MH recovery can save & match

successfully

Many savers need ongoing social & emotional

support, with peer support essential

Need for employment services to deal with job loss &

work issues

Lack of affordable housing stock was a barrier
Multiple life issues impacted savers’ ability to match
SSA disability benefits issues remained problematic
Multiple collaborative relationships require

administrative time & funding

Array of Services to Support Successful Saving

Employment Support
Ongoing Social & Emotional Support
Clinical Services
Financial Education
Asset-Specific Education
Benefits Planning & Assistance

Where Will You Go From Here?

How Will You Use this Knowledge?

SLIDE 18

Additional Resources

UIC Financial Education Curriculum &