Reaching Low Income Communities of Color on Real Finances

Economic Justice News 11.19,14

Earlier this year, The Leadership Conference Education Fund, working with the Asset Building Policy Network (ABPN) and brilliant corners Research & Strategies, undertook a public opinion research project aimed at improving the way we talk with communities of color about issues of financial health. Through a series of focus groups and polling, much of the findings were sobering – and not very surprising.

Those findings were discussed during a webinar on November 18 titled “Reaching Low Income Communities of Color on Real Finances,” and pointed to the fact that – while the economy continues to recover from the Great Recession – too many people in low income communities are still struggling to build assets that would give them a sense of financial security. They often live paycheck to paycheck, are unlikely to use mainstream financial services, and lack the resources to meet financial emergencies.

At the same time, the research found helpful ways for local banks, schools, churches, and other organizations already within communities to reach more people, by meeting them where they are and by focusing on improving opportunities for the next generation.

Here’s a quick recap of what ABPN’s research found:

  • When asked about savings, ABPN found that a little over 50 percent put little to nothing into savings every month. As far as the biggest obstacles to savings, 48 percent cited the cost of living, and 20 percent cited unexpected emergencies that kept making it impossible.
  • As far as where people go for help when they’re in a financial bind, about half turn to friends or family, and 30 percent to banks or credit unions – even though 70 percent have a bank or credit union account. (That last number varies a lot depending on race and gender.)
  • At the same time – and this came out very much in the focus groups – there was a strong reluctance for people to talk about their financial situation with friends or community. When ABPN polled on who taught people about personal finance, 36 percent said parents or family, 32 percent said they just learned through experience, and only 4 percent said friends or community.
  • So while people were very pessimistic about their own situations, there was much more of an opening when discussing future generations. A little over half said that children today are currently less prepared, but ABPN found more motivation to ensure that children do not make the same mistakes as them. ABPN asked what children should be taught:
    • 32 percent said they should be taught to understand the difference between wants & needs,
    • 30 percent stressed creating a budget and sticking to it, and
    • 29 percent said having the discipline to not spend more than you earn.
  • When ABPN took a closer look at the most important reasons to save, they found the most effective messages were more immediate and short-term in nature: having a rainy day fund, less stress and peace of mind, and not having to face the stigma of asking friends & family for money. This is in comparison to longer-term goals like homeownership or retirement, which could come off as less realistic and even tone-deaf.
  • ABPN also tested some specific messages about why it is important to focus on the financial health of children. The most effective messaging focused on having a responsibility to future generations. ABPN also got a good response to messages about teaching them to set priorities, warning them about the cycle of debt, and they even got a good response when putting savings in faith-based terms, like creating an abundance and not being shackled by debt.
  • Finally, ABPN found a lot of trust and support for local banks, churches, and communities to play a bigger role in teaching financial literacy – so there are big opportunities to work in this area.

Click HERE for the slides from the presentation, in PDF format.

Click HERE to listen to the audio of the webinar.