December 2003

Turning Earnings Into Assets

Speakers: Mary Ann Hewitt, Associate Executive Director, Maryland Council on Economic Education; Carol Jarvis, Ph.D., Executive Director, Maryland Council on Economic Education; Kevin Jordan, Associate Director, Bon Secours of Maryland Foundation; Althea Saunders-Ranniar, Working Families Initiative Program Director, Bon Secours of Maryland Foundation.

Moderator: Brian S. Lyght, Senior Associate, School to Career Partnerships Initiative, Annie E. Casey Foundation

View Kevin Jordan’s PowerPoint presentation on OROSW

View Brian Lyght’s PowerPoint presentation on the seven dimensions of effective personal financial education programs

Low-income workers who wish to move up and out of poverty need more than just a job; they also need to know how to make their earnings work for them and their families, said a panel of economic education experts at a JOTF/Open Society Institute-Baltimore forum on December 11.

For Baltimore’s low-skill workers, the path to financial independence often involves more than acquiring new skills and finding better-paying jobs. Achieving economic self-sufficiency for themselves and their families requires a sound knowledge of the principles behind saving, investing, debt reduction, and asset development.

These principles are complex and can be intimidating, especially for the large numbers of low-skill workers who never received formal financial management training. In response to this knowledge gap, public and private stakeholders in the Baltimore region are developing collaborative initiatives to provide financial literacy and other asset-building services to low-income families.

Carol Jarvis provided statistics about financial management in Maryland and across the country:
1. In 2001, Maryland ranked second in the nation in median household income, fifth in per capita personal income – and ninth in bankruptcy rates.
2. 10.6 percent of the 17,900 active clients of Consumer Credit Counseling Service of Maryland and Delaware, Inc. are between the ages of 18 and 26. People within that age range represent approximately the same percentage of the general population.
3. Fifty percent of high school graduates enter the workplace directly from high school, but only 15 percent of graduates received any instruction in personal finance.
4. Forty percent of Americans say they live beyond their means. Fifty percent of all Americans live from paycheck to paycheck.
5. Americans saved only 2.3 percent of their disposable incomes in 2001; during World War II, Americans saved 24 percent of their incomes.
6. Only 48 percent of Americans save for retirement; companies that provide pensions or manage retirement funds are becoming increasingly rare.

Dr. Jarvis described the Maryland Coalition for Financial Literacy (MCFL), which grew out of a concern within the Maryland Council on Economic Education regarding the large numbers of Marylanders who are taken advantage of by unscrupulous lenders. Among MCFL’s goals is that every Maryland schoolchild will have taken a course in personal finance before he or she graduates from high school. Currently, only Baltimore County offers financial education in its high schools.

Mary Ann Hewitt offered details about MCFL’s free programs, including the Stock Market Game, an international educational simulation that teaches adults and youth about stock markets and the U.S. and global economies. Another program, Financial Fitness for Life, is designed for low-income communities and offers fundamental lessons about credit, debt, and wealth. MCFL also provides training for service providers who wish to educate their clients about the basics of financial management.

For more information about the Maryland Council on Economic Education and the Maryland Coalition for Financial Literacy, visit www.econed.org.

Kevin Jordan listed some of the economic challenges facing residents of Southwest Baltimore, the site of Operation Reach Out SouthWest (OROSW) initiative. The average wage in Southwest Baltimore is $9.60 per hour, while the average starting wage for participants in OROSW’s Southwest Jobs program is $7.50 per hour. According to a 2001 report by Wider Opportunities for Women and others, the economic self-sufficiency level for a family of three in Baltimore is $17.75/hour.

Mr. Jordan reported that an OROSW study of the financial habits of Southwest residents found the following:
•Residents need immediate access to cash;
•Younger residents have little savings;
•Residents experience severe credit and debt problems;
•Residents want to save more, but do not believe they can;
•Residents do not trust banks; and
•People with debt problems are more likely to jump from job to job for only a slight increase in pay.

Althea Saunders-Ranniar spoke of the ways Bon Secours of Maryland Foundation and others are working to address Southwest residents’ financial needs. Through Our Money Place, a newly opened financial services center in Southwest Baltimore’s Westside Shopping Center, residents receive information about credit/debt management, banking, savings, taxes, budgeting, financial planning, and predatory lending.

For more information about Our Money Place, contact Kevin Jordan at 410-362-3016.

Brian Lyght presented characteristics of effective financial literacy programs. These “seven dimensions” were outlined Fannie Mae Foundation report entitled Personal Finance and the Rush to Competence: Financial Literacy Education in the U.S. They include:
1. Unambiguous mission and purpose;
2. Targeted outreach;
3. Adequate staffing and administration;
4. Evaluation and follow-up;
5. Program accessibility;
6. Relevant curriculum; and
7. Dynamic partnering.