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Small change making a big difference

United Way of Johnson County, MidWestOne partner for financial literacy program

NORTH LIBERTY– Banking and saving; debit cards and credit cards; paying bills and paying off debt; insurance, taxes and investing…
Regardless of income, navigating the maze of financial decision-making is never simple. Yet money management is more often learned through the school of hard knocks than through any educational institution or formal curriculum.
Fortunately, a new financial literacy program is now helping guide the way for some Johnson County residents.
United Way of Johnson and Washington counties, in partnership with MidWestOne Bank, launched the Money Smart Johnson County Initiative to provide financial literacy classes to low-to-moderate income individuals and families. Modeled on the FDIC’s Money Smart curriculum, the local program began in October in two locations in Iowa City and North Liberty. The North Liberty class, held at the North Liberty Community Library, boasted a 100 percent graduation rate.
On Nov. 20, the 20 North Liberty graduates, armed with new knowledge and practical advice, proudly accepted certificates of completion and vowed to take charge of their money situations from here forward, and United Way staff members were on hand to help them celebrate.
“Having all of the North Liberty participants go through all five sessions is remarkable because it requires a commitment to learning and attending sessions for five weeks during times where there can be competing family priorities and unforeseen life issues that need to be addressed,” said Patti Fields, United Way’s Vice President for Community Impact and Engagement. “This really indicates the level of commitment and the need for services and assistance in North Liberty.”
Taught by MidWestOne professionals, the five-week program offers basic information about banking, money management and financial goal setting. Eligibility is income-based; participants must be at or below 200 percent of the federal poverty guideline, but every person who completes all five weeks of classes receives $500 to open a checking or savings account at the financial institution of his or her choice.
“There was obviously a commitment to the program and also enough of an incentive that it was important,” said Fields. Having a bank account is key for financial stability, she added, and the organizations’ goal was to determine what incentive would be effective to make the effort worthwhile to participants. “We thought it would be successful if we have 50 percent (participation). And look what we had.”
While the incentive was appreciated, participants on graduation day were equally thrilled with the other benefits they gained– a better understanding of banking concepts, a stronger handle on spending decisions, and the feeling of being in control of money instead of it controlling them.
“It taught me how to keep track of things, like ATM receipts,” said participant Anne Welch. “When they started showing us how to use the spreadsheets, and I’m doing my math in the corner, I realized how much I was spending on iced coffee every month. We need to learn to discipline ourselves, and this definitely helped.”
Fields said meetings last spring between area service providers and banking institutions pointed to the need and urgency for financial education and literacy. According to the United Way website, the “Cost of Living in Iowa” report and the 2010 Johnson County Community Assessment indicated that 33.7 percent of households in Johnson County are at 200 percent of the federal poverty level or below. Financial education and literacy programs are targeted toward helping individuals gain skills to work their way toward financial stability.
“United Way really felt it was an important gap to address because financial illiteracy can compound problems. Without the basic understanding of money concepts and financial options, people are likely to pay more than they have to for financial services, fall into debt, damage their credit records, or even declare bankruptcy,” said Fields. Those without bank accounts sometimes rely on the high-cost alternatives of check cashing services and very high-interest financial service options.
“Poor financial choices harm both the individuals and our community. In reality there are so many people who may live paycheck-to-paycheck, where it only takes one event– like a car repair or a significant illness– that can break down everything,” said Fields. Interventions like the Money Smart program help people living at a lower income rate, but there are still others at higher income levels who lack significant savings, are on fixed incomes without the opportunity to increase earnings, and those without income support when emergencies happen. “We see instability a lot, across many populations,” she said.
And circumstances that create instability are different from household to household, said Fields, which lent diversity to the Money Smart attendees.
“There were single individuals that had fixed incomes, parents working to make ends meet and care for their families, and a diverse set of households that participated,” Fields noted. “As highlighted in “The Cost of Living in Iowa,” for our area, a household needs to earn 200 percent or more of the federal poverty guideline to meet a basic needs budget that allows for food at home, transportation to and from work, housing, childcare (if needed) and medical care. This basic budget does not allow for savings, debt reduction or ability to respond to life emergencies.”
Class graduate Welch estimated she was one of the oldest participants in the group, but thought she might have had more to learn than anyone.
“Everybody brings something different to the table. A lot of people came in already organized, and others are learning new skills,” Welch said. She was happy to see the wide range of ages of those who took the class. “I think it’s great that there were a lot of young people here, because they’ll learn young. They will greatly benefit from this.”
MidWestOne Bank North Liberty branch manager Scott Jamison and branch universal banker David Starr, who instructed the five sessions, received high praise at the conclusion of the program from class members, including Sara Lemley.
“They explained everything through all the modules each time, and answered all our questions,” said Sara. “I would definitely recommend someone else to take it, because it’s an awesome opportunity to learn how to save money and better manage your money.”
Starr said he was glad to help with the Money Smart program because he understands what it can be like to be confused about money; when he started his first bank account at the age of 16, he was handed an ATM card and a checkbook, and then left on his own to figure it out.
“This is the first time I’ve ever done anything like this,” said Starr. “I truly enjoyed it. This (class) is something that I would like more people to take, so they can see there is help out there, that there are solutions.”
Fields said program organizers will now pull together all the data, outcomes and feedback from the pilot classes for review, and make changes to the program and process to make them even better for the next set of participants. In addition, the United Way is scheduled to conduct a new community assessment in 2015, which will provide additional information to help shape and improve the program in its next iterations.
“Since the 2010 Assessment it seems that 200 percent of the Federal Poverty Guidelines may not be enough,” Fields said. “We may be adjusting some of the targets in the 2020 vision goals.”