Now in its ninth year, this is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.
The 2014 Annual National Survey Assessing Household Savings showcased the need for financial education:
- Only about one-third of Americans feel prepared for their long-term financial future.
- 68 percent reported that they are spending less than their income and saving the difference. This is down from 73 percent in 2010.
- Nearly two-thirds of respondents (64 percent) said that they “have sufficient emergency savings to pay for such unexpected expenses as car repairs or a doctor visit.” This is down from 71 percent in 2010.
- 76 percent said that they are reducing their consumer debt, or are consumer debt-free. Down from 79 percent in 2010.
MEDA’s local work
The Mission Economic Development Agency (MEDA) helps Latinos in San Francisco move up the economic ladder. The nonprofit’s programs help people find and keep housing, get a job, start a small business and prepare their taxes. No matter what their financial goal, MEDA works with people on their financial health–reducing their Debt, increasing their Income, building their Savings and improving their Credit (DISC). These are the building blocks to long-term financial prosperity.
Of utmost importance is saving–setting money aside for future use, whether it be for emergencies, large purchases or such predictable life events as higher education or retirement. There’s no doubt about the importance of saving, yet the process is difficult for low-income families struggling to make ends meet in a high-cost city such as San Francisco.
Despite the hurdles, MEDA helped 179 people increase their savings in 2014. Of those savers, 18 percent were classified as new savers (people who had never saved before). In addition, 49 percent were able to increase their savings by 30 percent or more from what they had when they initially came through the doors of Plaza Adelante, the Mission neighborhood center. MEDA also helped 124 people open savings products, ranging from basic savings accounts to savings bonds to college savings tools.
MEDA’s tax season is currently open through April 15th. As part of the tax-preparation process, provided at no cost, clients are encouraged to set aside a portion of their refunds for saving and other purposes.
Client success story
In 2011, Guatemalan immigrants Jose and Claudia came to MEDA to do their Individual Taxpayer identifications Number (ITIN) applications. At that time, they had resided in San Francisco’s Mission District for more than three years. Jose was the family’s sole wage earner, with a modest annual income of $20,000. Preparing the family’s taxes garnered them a refund of almost $800–a large percent of their annual income.
Jose and Claudia have returned to MEDA to do their taxes every year since, as they are comfortable with the free tax preparation services they are receiving.
In June of 2014, it was discovered by MEDA’s tax team that Jose had no credit score, which is common for immigrants who have no credit history in the United States. MEDA suggested that Jose save a portion of his refund and open a Secured Credit Card to build a credit history over time, which he immediately did.
Five months later Jose’s credit score was 735 (a credit score over 720 is deemed excellent.) This FICO score was good enough to apply for a regular credit card or a car loan. The family was on its way to financial strength, thanks to their saving, credit building and money management behaviors.
During “America Saves Week,” we invite you to come to Plaza Adelante to see how you, like Jose and Claudia, can start building your savings.