Finally, an Anti-Poverty Program that Actually Might Reduce Poverty

by James A. Bacon

Most anti-poverty programs are double-edged swords. They alleviate the symptoms of poverty — insufficient money for housing, food, health care — but do nothing to induce poor people to change their behavior and improve their condition. But this program is different: With funding from the the Cities for Financial Empowerment Fund (CFE), the City of Richmond will start providing free, professional, one-on-one financial counseling as a public service to residents.

“Financial empowerment is necessary to build an equitable economic environment,” said Mayor Levar Stoney in a press release. “This opportunity for one-on-one counseling will give residents the power to make informed financial choices with confidence.”

Bacon’s  translation: Rather than treating poor people as passive victims, the financial counseling program will explain how they can take control over their financial destinies by taking modest, achievable steps. The program teaches, dare I say it, personal responsibility.

According to the CFE website, financial empowerment spans four key disciplines:

Asset building. Weathering financial shocks and setbacks while saving for the future is a critical step toward financial security.

Banking access. Accessing a safe, affordable account is key to joining the financial mainstream and keeping earnings secure by saving.

Consumer financial protection. Cities have unique, powerful opportunities to protect residents and their assets from predatory practices.

Financial education and counseling. Professional financial counseling and coaching can tangibly improve household financial stability, especially when integrated into social services.

One reason (not the only reason, but one reason) poor people are poor is that they frequently make poor financial decisions. The unwillingness or inability to save allows them no resiliency in the face of life’s inevitable financial setbacks. They run up debt on their credit cards, which charge high fees and interest rates. When they max out their cards, they resort to “alternative” lenders who charge even higher fees and interest rates.  They get their cars repossessed, get evicted from their apartments, lose utility deposits, and pay all manner of late fees. Trapped in a cycle of debt, many poor people dedicate much of their limited income to keeping creditors at bay.

Virginians graduating from high school for many years now have been required to take online financial education classes. I’m not sure how much they learn. How much does the typical 17-year-old care about anything beyond scraping together enough cash to pay for the next concert or date night? By contrast, the City of Richmond’s program will reach adults and address real, immediate needs, not theoretical needs in the distant future. The people availing themselves of the service will be motivated to learn.

It’s important to maintain realistic expectations about what a program like this can accomplish. Still, we can legitimately refer to it as an “anti-poverty” program as opposed to a “poverty-perpetuation” program.

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7 responses to “Finally, an Anti-Poverty Program that Actually Might Reduce Poverty

  1. Virginia Cooperative Extension has been offering a very similar program for decades. Check with the local county/city office to find out if it’s in your community. Sadly, it is poorly funded, staff have been cut (resulting in one Extension Agent working across multiple counties) and that means volunteers can’t be trained and deployed to help.

    It can be difficult to “prove” impact of these programs. Often people want help with the part they want help with and not what we want to get them involved in. Still, one-on-one education and support is the best solution for many.

  2. Welfare benefits are plentiful. I know people who say that the financial gain of working is so small that they would rather stay home with the children. Anti-poverty training is best conducted at the high-school level by inspiring men to graduate from high school, get a job, and stay married to the mother of their children — in that order.

  3. The thing is – if you grow up with a bad education – financial literacy is just one of the deficits – you end up with not good jobs, low paying, no real hope of advancing, and no health insurance or 401K benefits.

    It’s about way more than poor financial decisions. It’s about not having enough money to pay for basic expenses – and that leads to evictions, repossession of cars, and if you get sick or injured – medical debt that you likely have no means to pay for.

    What do you do with folks like that? “teaching” them how to make “good financial decisions” is like a gnats on a dogs butt in terms of “helping”.

    That’s the problem with folks in poverty who are there primarily because they have poor educations… many of them got to high school and were so far behind that they either dropped out or the school graduated them because nothing else would be gained by keeping them.

    How do you fix this? You do it in the early elementary grades where you do everything you can to keep that child ongrade level so that when they do get to high school there is some hope they will graduate and be able to find a decent job.

    You can’t fix this with simplistic political philosophy and rhetoric.

    And again, I have no loyalty to the public school system. If we can find a better way through non-public school alternatives – I’m all for it but we have to be serious about it – we have to demand things that do work and not just beliefs and political philosophies….

  4. For once, I believe Larry G has stumbled obliquely into a partial truth: you cannot teach anything like financial literacy when the student cannot add and subtract. I know way too many adult poor people, mainly clients, who cannot add or subtract, hard as that is to believe. Without an adequate grounding in basic mathematics, financial concepts are out the window for a poor person. In this respect, “financial literacy” and “jobs” are at the same level of endeavor. You can’t get to either if you don’t know basic math. In the Richmond schools, my admittedly limited experience has been that they engage with abstract concepts of math instead of teaching a kid to memorize his addition and multiplication tables. Without the basics, the kid is usually toast. He won’t find a real paying job and he can’t be taught financial literacy. Good luck trying. A waste of money.

    Also, good luck trying to teach math in anything like the Richmond school system

  5. Lord Crazy. I can’t believe we actually agree on something! Yes – basic math not learned, is a killer.

    Most folks don’t realize it but the world we live in goes round and round on math whether it’s cell phones, or autonomous cars, or smart thermostats or drones – dozens, hundreds of things in our world.

    but we’re way back at being able to add and subtract which is way back from basic financial literacy and it points out just how sad the situation is – not just with Richmond – but with many school systems that have numbers of kids of parents who themselves lack basic education.

    Kids of College-educated parents are good to go. Kids of legitimate High School grads are good to go. But kids of parents who barely made it out of high school or worse – they are destined for a life like their parents or worse.

    Do we really care about this? Is it easier to just blame the parents and schools and move on? The only quibble I have is that those who say the die is cast – and those kids are screwed for life – need to admit it and those of us who do not accept it – can go forward knowing who is out of the equation and who is not.

  6. Fair points, mostly. I would argue that even kids high school grads are not good to go, and not even necessarily kids of college-educated parents. The level of ignorance at the college level is simply astounding

  7. Just another perspective on this… “What the Poor Don’t Need: Financial Literacy Training”

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