Why Financial Coaching Matters
Left Behind in The Great Recovery
According to the National Bureau of Economic Research, the Great Recession, which started in December 2007 and ended in June 2009, eliminated more than 8 million jobs and pushed unemployment to an all-time high of 10%. Seven years later, it is still leaving its mark.
Women and minority groups remain especially hard hit. Today, 1 in 7 women live in poverty, and 57% of children living in poverty are part of female-headed households. In addition to setbacks from the last recession, these households are struggling against generational poverty that has plagued our most vulnerable families for years. Higher crime rates and fewer opportunities for quality education and jobs make it more difficult for poor families to move forward.
In our home communities of Lowell and Lawrence, women head 16% and 30% of households, versus 13% nationwide. Of households living in poverty in those cities, 37% and 42% percent are headed by women, according to the U.S. Census Bureau, compared with 29% percent nationally. Additionally, Massachusetts ranks fifth in the nation for low-income households headed by women and suffered the greatest increase in homeless families nationwide, in 2014.
As debts rise and income remains stagnant, many families find it nearly impossible to get ahead.
The Case for Coaching
Increasingly, it is clear that financial coaching is an effective complement to anti-poverty programs. A 2016 study by the Consumer Financial Protection Bureau showed that participation in financial coaching results in measurable changes in financial skills, behavior, and confidence. Those who complete financial coaching programs are more likely to pay their bills on time, increase their savings, reduce their debt, feel more confident about their finances, and report reduced feelings of financial stress. This confirms results from our own programs.
The first “census” of financial coaching programs, conducted recently by the Center for Financial Security at the University of Wisconsin-Madison, finds that most programs last two to three months and participants see their coaches just a couple of times. Most coaches are responsible for multiple clients.
“Financial coaching focuses on the needs, strengths, and goals of the client. It also gives participants the confidence to make sound financial decisions”, says Budget Buddies Executive Director Anita Saville. “We believe that our program makes the most of this relationship by having each coach meet with a single client weekly over six months. We have already helped more than 400 women improve their financial skills, behavior and confidence. As we move into 2017 we look forward to helping many more women take control of their finances and their lives.”