Studies point to need for lifelong financial education
Winston-Salem Journal (North Carolina; CFED)
By: Peter Laroche
November 18, 2012
I am sure many Journal readers were shocked to read that the city's poverty rate reached 24 percent in 2011, and that the median household income dipped from $40,000 in 2010 to $37,501 last year, putting us at the bottom of the state's five largest cities. ('City's poverty rate rises to 24%,' Sept. 20) The numbers for Forsyth County as a whole were somewhat better, but median income was still lower when compared with the home counties of the state's other four major cities.
Unfortunately, it was not that much of a surprise to those of us who work at the nonprofit Financial Pathways of the Piedmont (formerly Consumer Credit Counseling Service of Forsyth County). These numbers, and the results of another recent study that found that 39 percent of Winston-Salem residents are 'asset-poor,' highlight what we have known for a long time: There are many residents in our area who are living perhaps only one paycheck away from a severe financial crisis. Some of them are middle class, or even what some would consider, from outside appearances, to be 'well off.' Over the last few years, our agency has helped many clients who are in danger of losing their homes or declaring bankruptcy, often because of job loss. Some of them never imagined they would have struggles like this, or need help from an agency like ours.
Therefore, it is more important than ever before to stress lifelong financial literacy education - for everyone, regardless of age or socioeconomic background. For that reason, and because we offer an array of services that can benefit almost anyone long before they face a crisis, we recently marked our 40th anniversary by renaming our agency Financial Pathways of the Piedmont.
Our wide array of services help clients build wealth for the longterm, achieve financial self-sufficiency, and attain - and maintain - financial stability. This is important, because many Winston-Salem and Forsyth County residents are at risk - because of low savings, high debt, or too little or no health insurance - of a financial disaster if a job loss, serious illness or divorce occurred in the family.
A report conducted earlier this year by the Corporation for Enterprise Development yielded the disturbing estimate that 39 percent of Winston-Salem households are 'asset poor,' meaning they have insufficient net worth to provide even for basic needs, for more than three months, should they experience a sudden job loss or medical emergency. This is by no means a problem limited to low-income families. In fact, 28 percent of these asset-poor families earn between $45,655 and $70,014 annually; 15 percent earn $70,015 to $107,289; and 6 percent earn more than $107,289. It is not limited only to those with little education, either; 37 percent of the households have at least one adult with a bachelor's or advanced degree.
Obviously, there is an ongoing need for services that educate individuals and families about how to earn, save and invest in ways that will achieve long-term financial security. As a nonprofit organization charging no annual membership fees, Financial Pathways of the Piedmont is continuing its 40 years of working with partner organizations to help families with budgeting, debt management, and credit rebuilding and asset protection/foreclosure prevention. Our financial counselors receive the highest level of certification and ongoing training available, and they provide services with a high level of care and confidentiality. Some services, such as foreclosure mitigation, are free to the client. Others are charged only a modest fee based on a sliding scale of income.
Most important, our Center for Financial Education provides outreach and education programs to people of all ages, beginning with elementary school, on topics such as budgeting, the wise use of credit, the psychology of money, creating a plan to reduce debt, and other specialized courses. For a nominal fee, a certified Financial Pathways Financial Educator will speak to your group about these or other financial topics.
It is no longer appropriate to view financial education and counseling as something only 'poor' or uneducated people receive, or something that should be sought only in a time of crisis. In an evolving economy where jobs are not plentiful enough, financial institutions have tightened up their consumer lending requirements, and having a high credit score is critical in getting employment, insurance, housing and affordable loans, it is important for everyone to be well informed about managing money at all stages of their lives.
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