Stability in the midst of uncertainty: How United Way is helping people build a strong financial future

The current economic climate has left many individuals and families worried about their future. Inflation and the ongoing impacts of the COVID-19 crisis have made it difficult for a lot of people to afford basic necessities, and those struggling before are finding it even more challenging. United Way of Greater St. Louis provides education, training and other resources to help people become financially stable now and in the future. We talked with Debbie Irwin, United Way’s director of systems change – community economic development, about the importance of our financial stability initiatives and how they can help set individuals and families up for success during uncertain times.

One of United Way’s impact areas is helping people with financial mobility. Can you talk about how helping people find secure financial footing positively impacts their whole self or family?

Financial mobility programs can have significant effects on individuals, families and even generations. Personal finance is not typically taught in school so without guidance, many people are left on their own to figure out how to manage their finances, making costly mistakes. With financial education courses, one-on-one financial coaching and non-profit agency support, people learn new ways to think about and manage their money.

They also learn about financial products that can help them, like low-cost checking and savings accounts, a retirement account, or insurance. Individuals that go through our financial education and savings programs can then share their knowledge and skills with their children or other family members, modeling positive behaviors, and creating a ripple effect through the community.

Individually, people feel more confident and in control of their future because they have new knowledge and access to tools to help them manage their money and make financial decisions. When people are more financially secure, and feel less financial stress, they also tend to have better health outcomes, and better outcomes for their children.

How does helping families gain greater financial mobility help the overall community?

If families can improve their financial situation and move up the economic ladder, they are less likely to need social services and public assistance. They also have better outcomes in terms of child well-being, health, and education. The overall community benefits through higher employment, wages, and a larger tax base. With higher incomes and more wealth, families can contribute to overall economic growth and the economic health of the region through their purchasing power and community investment in homeownership and other assets.

United Way supports many programs through our financial stability initiative. One of those is partnering with four local tax coalitions to provide free tax preparation assistance to low- and middle-income families. How does that support help families and the region as a whole?

Volunteer Income Tax Assistance (VITA) programs help families save money on tax preparation fees and helps make sure they receive all the tax credits they qualify for, like the Earned Income Tax Credit (EITC) and the Child Tax Credit. About 20 % of eligible working families do not claim the Earned Income Tax Credit.  Research has shown that the Earned Income Tax Credit program also has favorable outcomes on education, health and child well-being, another reason United Way supports the free tax preparation program.

With additional money in their pockets, families can use those dollars to pay bills, reduce debt, or save for an emergency fund or other assets.

The St. Louis community benefits when local families save money on tax services and claim their EITC refund. This money is invested back into our region through spending on basic needs, transportation, housing, education and other consumer goods and services.

United Way’s ASSET program, which is a multi-pronged financial empowerment program for low-income families with children, will happen again this spring, how does this program help people build their financial footing?

Often, financial education is provided to help low-income families learn how to manage their money better. While financial education is a very important component, education alone is often not enough to help families reach their financial goals. The ASSET program provides additional support to low-income families by combining goal setting, education, credit building, and financial coaching with a monetary incentive to save. Families save money over 4-6 months and receive a savings match after completing the program to pay down a debt. Trained volunteer financial coaches work with families during the saving period to provide support in helping people reach their goals and overcome any obstacles to saving.

The program also helps build capacity with nonprofit agencies to deliver financial and asset building services through training and technical assistance. Program evaluations for the ASSET program show consistent positive reported decreases in feelings of financial stress and increases in participant’s attitudes, knowledge and financial behaviors.

Tell us a little bit about United Way’s partnership with the St. Louis Regional Financial Empowerment Coalition and how that helps people throughout the region with financial literacy.

United Way serves as the “backbone” agency for the St. Louis Regional Financial Empowerment Coalition, which means we provide in-kind services, and staff support for everyday operations, event planning, grant writing and marketing. United Way staff also serves in critical leadership roles, working in tandem with coalition volunteers and donors to manage committees and put on community outreach and education events. United Way has been a key champion of Money Smart Month, where diverse organizations such as financial institutions, nonprofits, churches, libraries, and other community organizations come together during the month of April every year to offer free personal finance classes and fun events for the whole family.

Last year, studies showed that only about one-third of Americans had a working understanding of interest rates, mortgage rates and financial risk. Why is financial literacy so important in helping people withstand unexpected crises or financial challenges?

Financial literacy is important for so many reasons! Regarding being able to handle unexpected expenses or life challenges, having an emergency fund can be critical, and even then, sometimes that is not enough. For example, a serious medical condition that racks up thousands of medical bills, or a devastating weather event, like the recent flooding that we had in our community last year, can deplete any savings a family may have. That is why a wholistic approach to financial well-being is important. Understanding interest rates and credit scores is important for making sure people don’t pay too much for the cost of credit or get into unaffordable, predatory loan products.

It is also important to maximize how we use income and manage day-to-day expenses. To do this requires a basic understanding of how much money is coming in and how much is going out – the household’s cash flow. Including “savings” as another “bill” to be paid every month can be one step to help families become more resilient and be better positioned to weather the storms that life brings, that and having good insurance policies!

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Rodney Humphries
Rodney Humphries