FINANCIAL LITERACY ANNUAL REPORT. mpowering minds about money

Transcription

1 FINANCIAL LITERACY ANNUAL REPORT 2015 mpowering minds about money

2 ! In 2014, the Wall Street Journal published a study indicating that the most difficult conversation for Americans to have is personal finances. Without open discussion or sound understanding of financial matters, various repercussions arise. Families on the edge fall into a cycle of poverty, millennials who enter the work force make blind financial decisions, students in secondary schools lack chances to gain financial literacy. As we began to develop our Community Change Initiative (CCI), our goal was to open the discussion on personal finances and increase access to financial literacy. Moreover, we believe an increased knowledge of personal finances empowers the community to address related issues. Once we found our purpose, we were referred by multiple nonprofits to mpowered, a local organization that fosters understanding within the community. Thus, we began to collaborate with our primary stakeholder to address the issue of financial literacy in local Denver communities. Through multiple meetings with Chad Gentry, mpowered s executive director, we constructed a sustainable plan to help achieve our goals. This consisted of facilitation of small group discussions in mpowered s finance classes, research for an infographic regarding different aspects of financial literacy, and a survey to deduce how the millennial generation responds to personal finances. We began carrying out our initiative by attending classes led by Carlos Colón, one of mpowered s personal finance coaches. Whether at Habitat for Humanity or Englewood Schools, we participated by answering questions about our own experiences with personal finances and by leading small group discussions to create a safe environment for discussion. Simultaneously, we conducted our survey of about 200 millennials, gathering widespread responses on how the generation reacts to personal finances. Finally, we performed research on various financial issues that range from credit to student loans. With such information, we drafted an infographic to help mpowered achieve its goals. While we started our journey wanting to create widespread change, we came to realize that our work though small is incremental and impactful to the people whom we touched. Though the work to extend financial literacy throughout the community is unfinished, we leave this issue with a sense of hope. Hope, as Václav Havel describes, is not the conviction that something will turn out well, but the certainty that something makes sense regardless of how it turns out. Under this mindset, we believe that someday, financial literacy will not be an issue, but rather something widespread among our local community. Thank you for this chance to serve those without a voice, to grow as leaders, to change the world one small step at a time. Sincerely, Jordan Lange Ronan McIntosh Aish Narang Andrew Pham Austin Richards!

3 MISSION STATEMENT To empower individuals in the metro Denver area to make sound financial decisions for a brighter future. THOROUGH DESCRIPTION OF ISSUE Imagine you are working 60 hours per week just to put food on the table and pay the bills when your son looks up to you and says Momma I want to go to the University of Denver! You smile at your child for their passion for school, but on the inside tremor with the idea of having to pay for such an expensive college. Do you take out a loan? What is a good interest rate? Is it compounded over time? When should you be expected to pay it back? This was the story of a woman and her son we met at a local elementary school here in Denver. She sought out mpowered to gain information regarding the best possible set up for a college savings plan for her son. When someone is unfamiliar with and/or has trouble navigating the financial market (e.g. saving, budgeting, banking, etc.), they are financially illiterate.

4 Conversely, the National Financial Educators Council defines financial literacy as possessing the knowledge on financial matters to take effective action that best fulfills an individual s personal, family, and global community goals. Over the past three years, the Treasury Department and Department of Education have teamed to assess financial literacy in U.S. high schools, stating the results haven't been pretty: the average score of almost 76,900 students in 2010 was 70%. Last year's testing of about 84,000 students and this years of about 80,000 students were both a point lower: 69%. This evidence shows that a vast majority of young Americans suffer from a lack of financial education. When these students leave high school, they need to be prepared to negotiate interest rates and manage their finances. In an increasingly complex financial system this education is needed now more than ever. While there have been various studies on financial literacy for young people, measures of financial literacy among adults are more indirect. On a national scale, a survey conducted by USA Today finds that 40% of adults gave themselves a grade of C, D, or F on their knowledge of personal finance in 2012 and 75% of adults agree they could benefit from additional advice." These statistics demonstrate a significant lack of financial literacy among many adults in the country. In Colorado, 60% of individuals surveyed spend either more than or exactly what they make according to US Financial Capability. This leaves no money for a rainy day fund or unexpected expenses. Additionally, in a financial literacy survey of five questions, 53% of Coloradans answered three or fewer questions correctly. Once again, this reflects a widespread lack of financial literacy among average Colorado adults and the rest of the US.

5 TIMELINE Meet with mpowered March Observed Classes April Facilitated Group Discussions April Conducted/ Assessed Survey April Research and Drafted Infographic May Share Finding to mpowered June OUR RESULTS This community change initiative confronted the issue of financial literacy through three fronts, all of which we found to be successful. Observing personal finance classes taught by mpowered on the subject of credit and debit at Habitat for Humanity, as well as budgeting at AmeriCorps and Habitat for Humanity, we noticed that many individuals were not comfortable discussing their personal questions about finance in front of the whole class. We decided with Personal Finance Coach Carlos Colón that we would divide the following class into smaller groups and help develop individual questions on a more personal level. We then co-taught a course on talking about personal finance with children at Englewood Schools. By leading smaller group conversations with the question, What do you want to know?, we successfully helped three families feel more comfortable learning concepts that were new to them and provided a safer environment in which they could ask questions they would not have been willing to ask in front of the larger classroom setting. This aided Mr. Colón in understanding what unique questions were really in his classes. Individuals could then have more personal concerns addressed, outside of class material.

6 When first approaching mpowered, we asked them what we could do that would help them the most in their work as a nonprofit. In 2013, they began a public awareness campaign, called Keeping Up with the Joneses An honest look inside the American family. It was designed to help change the public conversation around personal finance in Colorado and inform more people about services offered by mpowered. According to Executive Director Chad Gentry, mpowered was unable to obtain resources for an important part of this campaign the creation of an infographic. Mr. Gentry believed that we could make a long-term difference with the organization by conducting scholarly research on everyday expenses for the average American household to be used in creating this infographic. We provided mpowered with the research they believed would have the greatest impact. This will be used as an educational tool by the organization to bring new segments into the personal finance conversation and utilize their courses, coaches, and other resources to learn more. mpowered informed us that millennials are an important demographic that should better understand money management, with increasing tuition rates and individuals coming out of college with more debt than ever before. Although mpowered has not yet approached this demographic, they are interested in building courses designed for millennials in the near future. We decided to conduct a survey to find out more about millennials financial knowledge and received nearly 200 results. One of the most significant results we discovered is that millennials would be very interested in receiving

7 coaching services, like those mpowered provides. We presented our data and findings to Mr. Gentry and Mr. Colón, who intend to use this information as a foundation for building future millennial-focused courses. Former President of International Physicians for the Prevention of Nuclear War Mary-Wynne Ashford once said: Since you cannot see the future, you simply proceed to put one stone on top of another, and another on top of that. If the

8 stones get knocked down, you begin again, because if you do not, nothing will be built. The results of our CCI are not immediate and visible. We do not know precisely how the three families we helped will use their new awareness about financial conversations with children in the future, or how many people the infographic we helped create will reach, or if mpowered will actually be able to

9 construct new courses for millennials. However, we do know that if we did not work on this initiative, we would not have contributed anything new to address an undiscussed issue. We hope that our efforts will help make personal finance a more open topic of conversation in the local Denver community and that more people will seek out the services offered by mpowered. There is not an organization we would trust more than mpowered in the ongoing endeavor to empower Colorodans with financial literacy, and we are committed to continuing our actions to support this empowerment in any way we can throughout the future. OUR STAKEHOLDERS The stakeholders we initially contacted had high influence on the issue of financial literacy, as they belonged to nonprofits dedicated to providing financial resources. These stakeholders had a low stake in the issue because their personal lives are not impacted by financial literacy, as their professions require them to have a knowledge of finances. We were referred to work with mpowered from numerous nonprofits in Denver who take advantage of their coaching services: Loan Officers Brittany Woedl and Jillian Gassen at Accion International We build sustainable, scalable microfinance institutions (MFIs) that share our commitment to the double bottom line maximizing both financial and social impact by providing those MFIs with management services, technical assistance, investments and governance. Program Associate Deya Zavala at the Rocky Mountain MicroFinance Institute

10 The Rocky Mountain MicroFinance Institute (RMMFI) is a non-profit organization that provides learning, lending, and coaching to grow Community Entrepreneurs who build businesses to advance along the pathway to selfsufficiency and self-worth. Director of Business Development Programs Elena Vasconez at Mi Casa Resource Center Mi Casa is among Colorado s oldest and largest Latino-serving nonprofit organizations. Since 1976, Mi Casa has been dedicated to advancing the economic success of Latino and working families in the Denver Metro area. mpowered, our Primary Stakeholder: mpowered is a Colorado-based nonprofit resource for Coloradans who want to learn about money management and participate in coaching to achieve their personal definition of financial success. Since 2002, mpowered has provided affordable programs to help more than 40,000 people make informed financial choices. With offices throughout metro Denver, mpowered is a leader in financial education and champions financial stability as one of the most important components of a healthy lifestyle.

11 OUR STAKE IN FINANCIAL LITERACY This issue is important to each group member as it touches each of us on a personal level. Financial literacy is knowledge that can affect anyone. Therefore, the current issue of financial illiteracy interests Aish because she, too, can be directly affected by being unable to develop a great credit score, save money for a home, and, most importantly, be able to support her future family. Therefore, by simply helping others learn the basics in order to make personal financial decisions, Aish hopes to create a more stable society. Three generations ago, Andrew s great-great grandpa was the owner of a pawnshop. While he made a significant amount of money off of this business, it was both unethical and often contrary to others well-being. So, the issue of payday loans was particularly interesting to Andrew because he felt he had a moral obligation to reverse the damage that was done years ago. In addition, Andrew helped his high school partner with Kiva a microfinance non-profit. Thus, Andrew has been involved with issues that relate to financial literacy since high school.

12 For Austin, financial illiteracy hits close to home. He believes illiteracy is one of the major causes of poverty. Growing up in a family riddled with debt and hardship, he has witnessed the ramifications of poor financial decisions and high interest rates. Hence, Austin wants to help empower people to expand the opportunities they are given. Lastly Ronan, as a finance and economics major, is interested in pursuing an investment banking and private equity career path. Since finance is his specialty, he believes the best way for him to impact the local community is to help communicate what he has learned to those who have not had the same opportunities he has had. He believes that understanding these subjects is one of the first steps to developing a better life, one where someone does not have monetary concerns. Jordan has a personal stake in this issue because he lacks knowledge of finance, despite attending a private university. This is also evident in the lives of those close to him, such as his sister who has problems with debt and managing income budgeting. Ideally, Jordan hopes that the group will be able to work to resolve these same issues for other members of the community.

13 Jordan Lange (719) Ronan McIntosh (720) Aish Narang (720) Austin Richards (719) Andrew Pham (303)