Delaware Offers Free Financial Advice

In the wake of the 2008 global recession, this statewide empowerment program is teaching financial wellness one person at a time.

National Journal
Lucia Graves
Jan. 23, 2014, 6:25 a.m.

Renita Patrick lives with her grown son and daugh­ter and four grandkids in a house in Wilm­ing­ton, Del. She emig­rated from Ja­maica 12 years ago, and for the last five years, she’s been work­ing at a nearby child-care learn­ing cen­ter, send­ing money back to her fam­ily and try­ing to help her grand­daugh­ter with minor school ex­penses.

Patrick is now in her 60s. Be­fore she found fin­an­cial well­ness coach Shay Frisby through the learn­ing cen­ter, she had no sav­ings. As much as she wanted to help her fam­ily fin­an­cially, Patrick real­ized she had to take care of her­self too, es­pe­cially as she got older. “I was do­ing people all around and I wasn’t do­ing me,” Patrick said of her fin­an­cial situ­ation.

Now that’s chan­ging. For the past six months, she’s been work­ing with Frisby to pay off her cred­it-card bills, con­sol­id­ate her debt, im­prove her cred­it score, and open a sav­ings ac­count with $100 at the Sun East Fed­er­al Cred­it Uni­on in Wilm­ing­ton. “I don’t have a lot of money in there, but it’s a start,” she said. “It made me feel so much bet­ter about my­self.”

If any­thing good has come from the fin­an­cial crisis, it’s that people are start­ing to wake up to the im­port­ance of help­ing people man­age their per­son­al fin­ances both at the na­tion­al level, with the form­a­tion of the Con­sumer Fin­an­cial Pro­tec­tion Bur­eau, and at the state level, with pro­grams like Stand By Me, a fin­an­cial em­power­ment pro­gram star­ted by Delaware Gov. Jack Mar­kell.

“There’s a lot of con­ver­sa­tion about eco­nom­ic mo­bil­ity and the like, and if we can provide some con­ver­sa­tion that em­powers people to take re­spons­ib­il­ity for their fin­an­cial lives and gives them the con­fid­ence they need to do that, I think that’s very power­ful,” Mar­kell said in an in­ter­view with Na­tion­al Journ­al.

The pro­gram, a joint ven­ture of the state of Delaware and the United Way of Delaware, lever­ages a small staff of just 18 full-time coaches to provide free per­son­al-fin­ance coun­sel­ing to more than 3,000 Delawareans. Al­though there are no in­come guidelines, the ma­jor­ity of par­ti­cipants are low- to mod­er­ate-in­come. Fifty-two per­cent of them are Afric­an-Amer­ic­an, and a sur­pris­ingly high num­ber of them — 72 per­cent — are wo­men. Fund­ing for the pro­gram, which costs about $1.3 mil­lion an­nu­ally, comes largely from the private sec­tor. Cor­por­a­tions and found­a­tions cov­er about 75 per­cent of the amount, while 25 per­cent comes from pub­lic sources, both state and fed­er­al.

Mary Dupont, the dir­ect­or of fin­an­cial em­power­ment for the De­part­ment of Health and So­cial Ser­vices, stresses the im­port­ance of hav­ing the state gov­ern­ment’s sup­port. “The most amaz­ing thing to me,” said Dupont, “is be­fore com­ing in­to gov­ern­ment I did work in the non­profit sec­tor, and this is not a job that the non­profit sec­tor can do alone. We have to have state gov­ern­ment in­volved in or­der to get real muscle be­hind this work.”

Part­ner­ing with state em­ploy­ers, non­profits, com­munity col­leges, high schools, and faith-based com­munit­ies, as well as child-care pro­viders around the state, the pro­gram of­fers per­son­al fin­an­cial coach­ing. What’s offered de­pends on the needs of the in­sti­tu­tion: With busi­nesses, the pro­gram is offered as an em­ploy­ee be­ne­fit. At com­munity col­leges, it is offered as a re­source to stu­dents and their fam­il­ies as well as to the staff. At high schools, it is offered as part of col­lege-ac­cess pro­grams. Areas that the pro­gram teaches in­clude budget plan­ning, debt man­age­ment, and help­ing people nav­ig­ate the fin­an­cial sys­tem with re­gard to ap­ply­ing to col­lege and pay­ing for it. The ap­proach is highly per­son­al.

That per­son­al touch is key, says Lauren Ly­ons Cole, a cer­ti­fied fin­an­cial plan­ner who has no af­fil­i­ation with the pro­gram. “Read­ing books or art­icles can be help­ful, but noth­ing beats get­ting per­son­al­ized ad­vice from someone who knows the de­tails of your spe­cif­ic situ­ation,” she says. “Hav­ing ex­pert guid­ance in cre­at­ing a plan can help re­lieve stress and put people on track to reach­ing their goals.”

The be­ne­fits go well bey­ond mon­et­ary con­cerns. Take, for in­stance, the dif­fi­culty of nav­ig­at­ing post­sec­ond­ary in­sti­tu­tions. “Those with a col­lege de­gree are ul­ti­mately go­ing to be able to get more,” Dupont says, “but get­ting it, ap­ply­ing for it, pay­ing for it, and get­ting fin­an­cial aid and stu­dent loan debt is com­plic­ated.”

Nav­ig­at­ing a com­plex fin­an­cial sys­tem comes with real costs. Stud­ies have shown that the stress of poverty im­pairs over­all cog­nit­ive func­tion­ing and hurts people’s abil­ity to do oth­er tasks. A full 53 per­cent of Stand By Me par­ti­cipants say they have little to no con­trol over their fin­ances, and 57 per­cent re­port be­ing ex­tremely to some­what wor­ried about their fin­ances. For them, fin­an­cial coach­ing means the op­por­tun­ity to go fur­ther in life.

Such find­ings are par­tic­u­larly mean­ing­ful giv­en in­equal­it­ies that ex­ist across race and class. The me­di­an na­tion­al in­come for whites is $57,000 a year, and in Delaware it’s $62,000. For Afric­an-Amer­ic­ans that num­ber drops to $33,000 per year, or $42,000 in Delaware; for His­pan­ics it’s $39,000, and $35,000 in the state. Ig­nor­ing the ef­fects of poverty on per­form­ance re­in­forces these dis­par­it­ies.

That Delaware is a small state makes co­ordin­a­tion of the pro­gram that much easi­er. Stand By Me has been able to con­tract with non­profits in every county, for in­stance, but there are only three counties to co­ordin­ate with. Im­ple­ment­a­tion in Cali­for­nia would be a bit more in­volved.

Stand By Me has re­cently com­pleted an 18-month pro­gram eval­u­ation, and the Na­tion­al Gov­ernors As­so­ci­ation is draft­ing a case study of the pro­gram to be dis­trib­uted to oth­er states. But for the most part, Dupont is keep­ing her fo­cus in state and in help­ing people like Patrick save and spend their money wisely.

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