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Your Money, Your Goals PDF

284 Pages·2014·1.79 MB·English
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YOUR MONEY, YOUR GOALS A financial empowerment toolkit for Social Services programs Consumer Financial April 2015 Protection Bureau Table of contents MODULE 1: Introduction to the toolkit .....................................................................1  An introduction to the CFPB............................................................................. 2  Financial empowerment and your life .............................................................. 4  Financial empowerment: A way to improve client and program outcomes .... 4   Making referrals ................................................................................................ 6  The goal of Your Money, Your Goals................................................................ 7  MODULE 2: Assessing the situation ........................................................................9  Tool 1: Financial empowerment self-assessment ...........................................11  Tool 2: Client goal and financial situation assessment.................................. 21  MODULE 3: Starting the conversation ...................................................................27  When should I bring up money topics? ..........................................................28  How should I bring up money topics? ............................................................ 29  MODULE 4: Emotional and cultural influences on financial decisions ...............39  Emotional influences on financial decisions .................................................. 39  Cultural influences on financial decisions ......................................................40  Cultural conflicts ............................................................................................. 41  How can this understanding help my clients?................................................ 41  MODULE 5: Using the toolkit ..................................................................................43  How does it work? ........................................................................................... 43  i YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS Tool 1: Client financial empowerment checklist ............................................ 45  MODULE 6: Setting goals ........................................................................................49  Setting SMART goals.......................................................................................50  Turning goals into savings targets .................................................................. 52  What about revising goals? ............................................................................. 54  Saving for education ........................................................................................ 55  Tool 1: Goal setting tool.................................................................................. 57  MODULE 7: Saving for the unexpected, emergencies, and goals .......................61  What is savings? .............................................................................................. 61  How to save .....................................................................................................62  Savings and public benefits............................................................................. 63  Savings plan ..................................................................................................... 63  What are the benefits of a savings plan?......................................................... 65  A safe place to save .......................................................................................... 67  Direct deposit and savings ..............................................................................68  Tool 1: Savings plan .........................................................................................71  Tool 2: Benefits and asset limits .................................................................... 75  Tool 3: Finding a safe place for savings ......................................................... 79  Tool 4: Increasing your income through tax credits ......................................83  MODULE 8: Managing income and benefits ..........................................................87  Income ............................................................................................................. 87  Benefits ............................................................................................................88  Getting income ................................................................................................89  Tool 1: Income and financial resource tracker ............................................... 93  Tool 2: Strategies for increasing sources of cash and financial resources .... 97   ii YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS Tool 3: Cash, paychecks, direct deposit, payroll cards, and EBT— understanding the benefits and risks.............................................................101  MODULE 9: Paying bills and other expenses ......................................................107  Paying bills..................................................................................................... 108  When cash is short: Prioritizing bills ............................................................. 111  Tool 1: Spending tracker................................................................................ 115  Tool 2: Bill calendar .......................................................................................121  Tool 3: Strategies for cutting expenses ........................................................ 125  Tool 4: When cash is short—prioritizing bills and spending ....................... 129  MODULE 10: Managing cash flow.........................................................................133  What is a cash flow budget? .......................................................................... 133  Making a cash flow budget ............................................................................ 134  Tool 1: Cash flow budget ............................................................................... 135  Tool 2: Cash flow calendar ........................................................................... 145  Tool 3: Improving cash flow checklist .......................................................... 149  MODULE 11: Dealing with debt .............................................................................157  What is debt? ..................................................................................................157  Good debt, bad debt?......................................................................................157  Tool 1: Debt management worksheet........................................................... 169  Tool 2: Debt-to-income worksheet ...............................................................173  Tool 3: Debt-reduction worksheet ................................................................177  Tool 4: Student loan debt ..............................................................................181  Tool 5: When debt collectors call ................................................................. 185  MODULE 12: Understanding credit reports and scores .....................................193   What are credit reports? ................................................................................ 193  iii YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS Why do credit reports and scores matter? .................................................... 193  What is in a credit report? ............................................................................. 194  Negative information .................................................................................... 196  Example credit report .....................................................................................197  Disputing errors on credit reports ................................................................204  What are credit scores? .................................................................................207  Tool 1: Getting your credit reports and scores ..............................................211  Tool 2: Credit report review checklist ...........................................................217  Tool 3: Improving credit reports and scores................................................223  MODULE 13: Evaluating financial service providers, products, and services .............................................................................................................227  Financial service providers ........................................................................... 227  Choosing financial products..........................................................................228  Managing a bank account..............................................................................229  Tool 1: Selecting financial service products and providers.......................... 235   Tool 2: Evaluating financial service providers .............................................239  Tool 3: Types of financial services................................................................243  Tool 4: Opening account checklist ...............................................................249  MODULE 14: Protecting consumer rights ............................................................255  Consumer complaints.................................................................................... 256  It’s your money—be aware and take care...................................................... 257  Tool 1: Red flags............................................................................................ 261  Tool 2: Protecting your identity ...................................................................263  Tool 3: Submitting a complaint....................................................................269  Tool 4: Learning more about consumer protection ..................................... 273  iv YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS MODULE 1: Introduction to the toolkit Welcome to the Consumer Financial Protection Bureau’s Your Money, Your Goals: A financial Case manager empowerment toolkit for social services The term “case manager” is used programs! If you’re reading this, you are throughout this toolkit, and it refers probably a case manager, or you work with case to anyone who works directly with managers. people with low or moderate income in a wide range of organizations and Finances affect nearly every aspect of life in the on a broad range of issues. Staff may United States. But many people feel overwhelmed have different titles, but they by their financial situations, and they don’t know generally come from non-profit or where to go for help. As a case manager, you’re in private sector organizations or city, a unique position to provide that help. Clients county, or tribal governmental already know you and trust you, and in many organizations, and they are generally cases, they’re already sharing financial and other responsible for the following with personal information with you. The financial clients: stresses your clients face may interfere with their progress toward other goals, and providing  Conducting needs assessments financial empowerment information and tools is a natural extension of what you are already doing.  Developing action plans with clients What is “financial empowerment” and how is it different from financial education or financial  Providing resources and referrals literacy? needed to implement action plans  Monitoring progress and Financial education is a strategy that provides evaluating results people with financial knowledge, skills, and resources so they can get, manage, and use their money to achieve their goals. Financial education 1 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS is about building an individual’s knowledge, skills, and capacity to use resources and tools, Financial empowerment including financial products and services. Empowerment is the process of Financial education leads to financial literacy. increasing the capacity of people to make choices and transform those Financial empowerment includes financial choices into actions and desired education and financial literacy, but it is focused results, according to the World Bank. both on building the ability of individuals to Financial empowerment is building manage money and use financial services and on the knowledge and ability of providing access to products that work for them. individuals to manage money and use Financially empowered individuals are informed financial services products that work and skilled; they know where to get help with for them. their financial challenges. This sense of empowerment can build confidence that they can effectively use their financial knowledge, skills, and resources to reach their goals. We designed this toolkit to help you help your clients become financially empowered consumers. This financial empowerment toolkit is different from a financial education curriculum. With a curriculum, you are generally expected to work through most or all of the material in the order presented to achieve a specific set of objectives. This toolkit is a collection of important financial empowerment information and tools you can access as needed based on the client’s goals. In other words, the aim is not to cover all of the information and tools in the toolkit - it is to identify and use the information and tools that are best suited to help your clients reach their goals. An introduction to the CFPB CFPB is the abbreviation for the Consumer Financial Protection Bureau. The CFPB’s mission is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products. Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families—that prices are clear up front, that risks are visible, and that nothing is buried in fine print. 2 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS We are working to give consumers the information they need to understand the terms of their agreements with financial companies. We are working to make regulations and guidance as clear and streamlined as possible so providers of consumer financial products and services can follow the rules on their own. Congress established the CFPB through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The Bureau:  Writes the rules for providers of financial products.  Oversees compliance with the rules.  Brings enforcement actions to stop violations.  Educates the public to help them navigate the market for financial services.  Answers consumers’ questions, handles their complaints, and shares data with the public about the consumer financial experience. Our primary strategies are:  Education—An informed consumer is the first line of defense against harmful practices.  Enforcement—We supervise banks, credit unions, and other financial companies, and we enforce Federal consumer financial laws.  Study—We gather and analyze available information to better understand consumers, financial services providers, and consumer financial markets. The Office of Financial Empowerment within the Division of Consumer Education and Engagement developed this toolkit because case managers like you meet with thousands of consumers that need high quality, unbiased financial information and tools to help them address financial issues more effectively. This toolkit can help you help your clients reduce financial stress as they become more financially empowered. We hope you will use this information, the tools found within this toolkit, and the resources at http://www.consumerfinance.gov with as many of your clients as possible. As you do, you’ll help inform and empower the individuals in the community you serve to manage their finances in ways that achieve their goals and dreams. 3 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS Financial empowerment and your life As a case manager, you may sometimes hesitate to share information about financial Case managers and financial empowerment, because you feel like you don’t empowerment know enough about it. Or you may feel like you As a case manager, you are in a good know the information but haven’t applied the position to provide financial information and tools to your own life. In other empowerment services to your words, you might sometimes feel like you don’t clients. Case managers like you have have the “right” to provide financial access to and the trust of millions of empowerment information, because you may feel individuals who are most in need of your own financial house may not fully be in financial empowerment services. You order. may feel more equipped and empowered to provide these services You can help your clients face money issues that when you read the content and use may be complicating their lives if you feel the tools provided in the toolkit. knowledgeable about money and comfortable in your own approach to money management, credit, debt, and financial products. As you work through each module of this toolkit, you will learn both the information and how the tools work. As you try out the tools, you may also find ways to use your money to reach your own goals more efficiently and effectively. Financial empowerment: A way to improve client and program outcomes Sharing financial empowerment information and tools with clients may feel like a completely different job—one more thing you’re being asked to add to your workload. But, once you become familiar with the resources in this toolkit, we believe it can become natural to integrate its contents into the work you do. That’s because its core functions relate to what you already do. As a case manager, one of your job responsibilities is likely to be assessing client or client and family needs. The toolkit starts you off with an assessment to help you understand your clients’ goals and the financial situations they may be facing. 4 YOUR MONEY, YOUR GOALS: A FINANCIAL EMPOWERMENT TOOLKIT FOR SOCIAL SERVICES PROGRAMS

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