April is National Financial Literacy Month and it’s a great time to focus on ways to help educate clients (and ourselves) about personal financial health. Many of NCST’s community buyers offer counseling to help their clients sort through financial difficulties that affect their daily lives as financial literacy and capacity are critical for anyone who plans to become a homeowner.
Findings from a recent consumer finance survey by NCST Sponsor NeighborWorks America highlight the importance of these services. One chief finding from the survey, which is the first to focus primarily on households with household income $75,000 or below, is the alarming fact that more than one-third (38 percent) of households have no emergency savings in place — whether to pay for the repair of a car that’s required to get to work, or to fix a major household necessity such as a roof or furnace. In addition, the survey found just 12 percent of adults cite saving for an emergency as their most important financial goal – not surprising when more than twice as many people (28 percent) said paying bills was their most important financial goal.
Additionally, far too many families still lack access to the financial mainstream. According to the 2015 FDIC National Survey of Unbanked and Underbanked Households, seven percent of households (approximately nine million households) in the U.S. were unbanked, and an additional 19.9 percent of U.S. households (24.5 million) were underbanked, meaning the household had a checking or savings account, but also obtained financial products and services outside of the banking system. These families often rely on alternative financial services providers, such as non-bank check cashers, payday lenders or pawn shops, many of which include sky-high interest rates and fees that further harm those struggling to make ends meet. Participation in the banking system also protects households from theft, reduces their vulnerability to discriminatory or predatory lending practices, and provides the opportunity to build credit history. You can view more of the FDIC survey findings at economicinclusion.gov.
When it comes to financial literacy and homeownership, there are many useful resources available, including the CFPB’s online tools and resources for homebuyers. What are your go-to sites? Send me an email and we’ll compile a list to share.
Sally Powell Schall is the Director, Communications & Marketing for NCST.