Promoting Financial Stability Financial Stability Many working families are walking a financial tightrope. Everyday expenses are high, and an unexpected event or emergency can send a household into financial crisis. The United Way of Northern Financial stability means new Nevada and the Sierra is helping opportunities and possibilities to transform the financial such as home ownership, planned uncertainty experienced by retirement, reliable many hardworking families today Real median transportation or attending into long-term financial household income college. It also means that stability. The Financial Stability in the United individuals and families become Partnership helps to promote States fell 3.6% crisis-resistant, using savings and independence through proven between 2007 and assets to get through difficult 2008, from strategies such as financial times. $52,163 to education, increasing income, $50,303. (1) and building savings and assets. Financial stability is of critical importance; many hard working Nevadans are experiencing unprecedented hardships. Median income has fallen, (1) unemployment is high, and our state leads the nation in both bankruptcy and foreclosure. (2) Through the Financial Stability Partnership, United Way is working in our community to help individuals and families gain financial stability and work towards long-term financial independence. Promoting Financial Stability Financial Education for Youth and Adults Financial education is the key towards financial independence. By providing people with information and skills to manage their financial resources wisely, they have the tools to make informed decisions regarding personal finances and can create positive relationships with financial institutions. Financial education is especially powerful when it involves action; participants may begin by building a household budget, Nevada has one of opening a checking account, savings account, or signing up for direct the highest deposits. bankruptcy rates (ranks 45th in the Financial education is important Mainstream banking products and nation), and leads throughout the lifespan, but services provide individuals and the nation (ranks especially important for youth. families opportunities for 50th) for the The knowledge and the skills financial advancement, compared foreclosure rate. (2) acquired help lead youth to young to check cashing services and adulthood with the skills they alternative lending institutions need to achieve financial that have higher fees and interest independence and personal goals. rates. Financial education helps The more that individuals and people to access the opportunities families know, the more likely in mainstream banking, including In a recent report, payday lending and they are to save, gain assets, and direct deposit, checking accounts, predatory mortgage improve their financial well-being. and savings accounts. lending practices were identified as Increasing Income key problems for When individuals and families increase income, they have more Nevadans. (2) available to cover basic expenses, and can also begin to save. United Way believes that helping families increase and maximize their income is a critical first step to achieving long-term financial stability. There are several strategies to help families increase income. Accessing the Earned Income Tax Credit (EITC) Promoting Financial Stability The Earned Income Tax Credit (EITC) is a federal income tax credit available to working individuals and families. It is the nation’s largest and most effective federal aid program. As a household’s earned income rises, the amount of EITC also rises, providing an incentive to obtain and maintain employment. The money returned to individuals and families through the EITC is used to pay current bills, gain assets, and build savings. Campaigns to promote the EITC and partnerships to offer free and low cost tax preparation help to bring money back to households and communities. The tax refund is Credit Repair and Debt Reduction often the largest Household income can also increase through credit repair and debt sum of money that reduction. Individuals with lower credit scores pay significantly more for many households financial services than individuals with higher scores, making good receive all year. By credit a priority for increasing total income. Credit score is also splitting the refund increasingly being used by employers, with low credit scores potentially between checking, savings and impacting one’s ability to get a job. Similarly, reducing debts means retirement that families pay less in financial fees and have more money for current accounts, this and future needs. Connection with credit counseling and financial simple change education helps people to repair credit and make good decisions about could result in borrowing and debt. millions of dollars Workforce Development saved in the U.S. (7) A steady labor market that supports a living wage is an important community goal. Education and workforce training helps individuals to increase their income through job preparation and advancement. Accessing Public and Employer Benefits Promoting Financial Stability Each year, hundreds of individuals and families don’t access public and employer benefits. In many cases, this is because people aren’t aware that they are eligible, or don’t understand how to access the benefits. By accessing programs such as Medicaid, Medicare, TANF, WIC, and other programs, working families are able manage difficult times, as well as use their earned income to provide a measure of stability. Similarly, employer benefits such as 401k matching, health insurance, and other options may be available but underutilized by employees. United Way of Northern Nevada helps to connect people to organizations and agencies that provide important access to benefits. A majority of people do not have a sufficient Building Savings emergency fund, Savings are especially critical for helping working families, who often defined as three to have no assets or access to credit, remain six months income financially stable during changes in income saved. (6) precipitated by illness, job loss, or other unforeseen circumstances. Building savings is a critical step towards financial stability. United way encourages people to save through savings campaigns. Additionally, partners More than one- working with the EITC encourage taxpayers to third, or roughly 76 split their refunds, ensuring that some portion million adults, say of the refund is saved or invested. they do not have any non-retirement savings. (6) Gain and Sustain Assets Asset protection refers to a set of tools and strategies that can help families retain their assets in the event of an emergency such as job loss, short term disability, illness, or even natural disaster. The tools and strategies for protecting assets include savings accounts, use of public and employer benefits, and insurance. In the case of an unexpected event or emergency, individuals and families are able to retain their assets and avoid crisis. Promoting Financial Stability Next Steps Promoting financial stability for individuals and families takes the efforts of the whole community. United Way of Northern Nevada and the Sierra is partnering with individuals, corporate partners, and organizations in our area to support a pathway towards long-term stability. Critical steps include increasing financial literacy, income, savings, and assets. Success can be measured through gains in home ownership, personal savings, and enrollment in technical training or The TransUnion education that prepares people for better paying jobs. Credit Risk Index ranks Nevada as the second riskiest state in the nation with a Credit Risk Index of 166.21. (3) Who We Are United Way of Northern Nevada and the Sierra (UWNNS) brings the community together to identify our most pressing needs, produce measurable results, and, thereby, improve lives. UWNNS is achieving meaningful impact here in our community. We use our expertise and knowledge through innovative funding of programs and initiatives that have a positive influence on the people of northern Nevada and the Lake Tahoe communities. Our Mission is to link the community's will and resources to improve lives. Sources 1. U.S. Census Bureau. American Factfinder. 2008. Promoting Financial Stability 2. CFED. 2009‐2010 Assets & Opportunity Scorecard. Expanding Economic Opportunity . [Online] [Cited: 9 30, 2009.] http://scorecard.cfed.org/downloads/pdfs/profiles/nevada.pdf. 3. TransUnion. TransUnion Consumer Credit Risk Index Continues to Rise, Though 13 States See Decline. [Online] [Cited: 9 15, 2009.] http://newsroom.transunion.com/index.php?s=43&item=541. 4. United Way. Achieving Income Stability. Live United. [Online] [Cited: 9 15, 2009.] http://www.liveunited.org/income/. 5. Bernstein, Jared. How Much Is Enough? Basic Family Budgets for Working Families. s.l. : Economic Policy Institute, 2001. 6. National Foundation for Credit Counseling. Consumer Tips. National Foundation for Credit Counseling. [Online] [Cited: 9 30, 2009.] http://www.nfcc.org/FinancialEducation/consumertips/NecessitySaving.cfm. 7. Jeff Zinsmeyer, Timothy Flacke. Build Savings at Tax Time: A Guide to Split Refunds. D2D Fund. [Online] 6 1, 2006. [Cited: 9 30, 2009.] http://www.d2dfund.org/research_publications/build_savings_tax_time_guide_split_refunds 8. Center on Budget and Policy Priorities. EIC Participation for 2006. [Online] [Cited: 9 16, 2009.] http://www.cbpp.org/eic2009/docs/EIC%20Participation%2006%20prelim.pdf. 9. Citizen Times. Earned Income May Bring Refund for Families. [Online] February 2008. [Cited: 9 18, 2009.] 10. Internal Revenue Service (IRS). Earned Income Tax Credit. [Online] [Cited: 9 15, 2009.] www.irs.gov.