Rich Collaborations: Bank of America & LIFT Promote Better Money Habits Amongst Advocates & Members

By LIFT on March 19, 2015

Categories: News, Our Work

by Katie Ouimet & Alex Houston (Financial Stability Fellows, AmeriCorps*National Direct, LIFT-Boston)

Two weeks ago, AmeriCorps fellows serving in 6 regions across the country at the nonprofit LIFT participated in a Better Money Habits professional development webinar workshop presented by our partners at Bank of America. As these experts reinforced, financial literacy and capabilities are not just the business of bankers or buzzwords for growing nonprofits, but essential life skills for everyone. Better Money Habits is an initiative between Bank of America and Khan Academy to bring practical lessons in short, entertaining, easy to remember video tutorials so that people can think about these issues and learn how to prevent financial problems before they happen.

As AmeriCorps members, LIFT fellows give a year or more of service and receive a modest living stipend. This does not mean that we are delaying learning to improve our money habits. LIFT’s founder and CEO, Kirsten Lodal prefaced the workshop with some context, reiterating that mission-based work is not always the best compensated so fellows and staff should strive to learn good money habits, as to “not end up in a financial hole because you’ve done the right thing for your country and for LIFT.” In fact, as a first year AmeriCorps member piloting LIFT-Boston’s Financial Stability Program, which focuses on helping members to increase and maximize their incomes, I’ve learned first hand the importance of setting clear financial goals and managing an organized budget for both myself and the members with whom I work.

Although totally manageable, learning to live on an AmeriCorps stipend can be an adjustment for many fellows. Financial advisors often recommend allocating about one third of your total income to housing, but most of my peers in the Boston office spend approximately 50% of their gross incomes on rent and utilities, and no, the Boston fellows are not living in brand new lofts overlooking the harbor. Boston has some of the highest costs of living in the country, which deeply impacts everyone in the city,especially those with limited incomes struggling to afford market rate housing. Many of the people who walk through our doors are struggling to make ends meet or spending more money than they make to stay afloat with rent and other expenses. Even when people have the income to support their families with a little extra to set aside, we see the financial frailty of many families’ situations who may be one job loss, illness, or family hardship away from an eviction, shutoff notices, or spiraling debt. At the Bank of America workshop, I learned that this circumstance is called “liquid asset poor” and that it’s not unique to the members we work with in Boston, or to those with whom my counterparts in LA or Chicago meet, but is truly a national issue. Given a loss of income, 44% of Americans would have the assets and resources to support themselves for only 3 months or less.

When income is limited, it becomes that much more important to prioritize household needs, seek out the most affordable options, and develop realistic budgets and savings plans to help you reach your goals and prepare for unforeseeable costs. Connie Montaña of Bank of America, introduced LIFT fellows to the importance and practicality of budgeting. She reframed what is often seen as a necessary evil, explaining that “what we’re really talking about is your prosperity life plan.” Connie offered advice about questions to ask about spending habits and encouraged everyone to “pay yourself first,” propelling us towards our goals by prioritizing putting money towards savings before anything else.

Unfortunately, many people do not have access to information, resources, and mentors to support healthy money habits or to demystify financial systems that can sometimes seem impenetrable. In fact, I was amazed to learn from the workshop exactly how the mysterious credit score is calculated, helping me to understand which factors I can control and thus ensure that I’m making steps towards building good credit. I meet with members daily to talk about finances. I can’t sugarcoat; these are hard conversations. However, they can also be empowering and fruitful discussions that put our members in control of their finances. At LIFT we work with members on their housing, education, employment, and health goals. Talking about money can be especially hard because we often see it as a limiting factor, intimately impacting other aspects of our lives. It can be scary to take a close look at your resources and habits, fearing what you might find and how it might impact your aspirations. But that’s why LIFT is taking an intentional effort to support people from this angle. We know that goals of any kind can seem daunting and impossible at first, but having an advocate sit by your side to listen, help you break down the issue, explore possibilities, develop a goal and steps to reach it, and cheer you on along the way, can bring hope, effort, and results. LIFT is piloting financial capacity-building programs with various models across our regional offices. Each seeks to help people understand their current financial habits and circumstances, gain the resources to take control of their spending and saving, and ultimately build more financially stable futures.

One example of financial capacity-building at work comes from my colleague Alex Houston, the Financial Stability Fellow of the LIFT-Boston Somerville office. Alex had one of her first financial coaching meetings with Jane, who came into LIFT last fall looking for help in applying for utility assistance for the harsh upcoming winter months. Jane confided to Alex that she has always struggled with her finances and becomes very stressed talking about money, developing a cycle of anxiety and avoidance as she couldn’t face looking at her bank statements and thus wasn’t able to make productive plans for the future.

Alex listened to what Jane had to say and then they got to work. First, they applied for LIHEAP (the Low-Income Household Energy Assistance Program), and after Alex gradually moved the meeting towards talking about money and budgeting. Jane met with Alex two more times, and with guidance and encouragement, she created realistic financial goals that she could achieve. For example, Jane now keeps track of how many times she goes out to eat and checks her bank statement on a weekly basis. She also recently set up a monthly automatic deposit to her savings account, which has given her a better sense of ownership and security over her financial matters. Alex said that attending trainings on financial capacity-building, such as the one recently offered by Bank of America, allowed her to feel more confident and capable when working with Jane. During their last meeting, Jane mentioned that discussing and thinking about her financial situation no longer made her nervous and she felt more ready to make plans for how to improve her situation than she ever had before!

At LIFT, one of our core values is helping people uncover a sense of possibility for their lives and the confidence and resources to pursue their goals. We see that helping people get jobs and stable housing is not enough if they don’t have the skills to manage their finances and assets long-term, just as financial skills are not enough for those in deep poverty who lack the resources to which they can apply these skills to improve their situations. Poverty alleviation is complex, but I think one of greatest organizational strengths of LIFT is our enthusiasm to listen to and learn from the people we serve and the partners who surround and support us. In the words of a Bank of America representative, “Life is better when we’re connected and we’ve been connected to LIFT.” As LIFT strives to promote financial capabilities, helping our members control debt and build credit towards a better future, training our AmeriCorps fellows to develop healthy saving habits early, and taking part in the national conversation about lifting families out of poverty, we’d like to thank our partners at Bank of America for all of their support. Here’s to empowering each other. Here’s to brighter financial futures. Here’s to Better Money Habits.