Empowering Homeless Families: The Vital Role of Financial Literacy
In our society, financial literacy stands as a beacon of empowerment, guiding individuals and families toward stability and self-sufficiency. However, amidst the challenges of homelessness, this crucial skill often remains elusive for many. In this blog post, we explore the paramount importance of financial literacy in the lives of homeless families and how it serves as a catalyst for transformation and resilience.
Financial literacy as we define it encompasses the knowledge and skills necessary to make informed and effective financial decisions. It involves budgeting, saving, understanding credit, managing debt, and planning for the future. For homeless families, who face heightened economic vulnerability, financial literacy is not just beneficial—it's essential for breaking the cycles of poverty and homelessness for good.
According to research conducted by the FDIC in 2021, nearly 20% of households across the country were either unbanked or underbanked. Alternative financial services like non-bank money orders, payday loans, rent-to-own services, and pawn shops are widely used among those with no current bank account or whose bank account lapsed for an extended period. Many of these services have interest rates so steep that households struggle to stay afloat. This only perpetuates the struggle while the cycle continues.
At Homestretch, we have dedicated staff leading our award-winning financial literacy programming. For over 20 years, Heather Lynskey has run our credit counseling program and tax center. Throughout the course of time, one thing she noted as remaining constant was the cost of being poor. “It’s expensive to be poor,” Heather shared. “People with poor credit tend to pay more for their car payments and car insurance. And if they don’t have transportation at all, many will use Uber to get children to daycare, to work, to school, even to the grocery store.” In addition to poor credit, homelessness is often accompanied by a myriad of financial obstacles that lead to poor credit, like lack of income and overwhelming debt. Without adequate financial literacy, families may struggle to navigate these challenges.
When families first enter our program, Homestretch staff eagerly seek to get clients on the road to financial freedom. Our qualified professionals meet with each family to develop a spending plan, develop a debt reduction plan and to teach money management skills. We collect a percentage of the client’s gross monthly income that is immediately transferred to their debt repayment account. And once debts are paid that percentage then rolls into a savings account. Upon graduating from our program, the client receives all the money they saved. We’ve witnessed this program helping clients save as much as $25,000 or more!
At Homestretch, we’re serious about breaking cycles of poverty. By equipping homeless families with financial education and tools, we offer them a pathway to regain control of their finances and rebuild their lives. Moreover, understanding the basics of banking, credit, and debt management empowers individuals to advocate for themselves within financial systems, fostering a sense of agency and self-determination.
By instilling resilience and resourcefulness through the Homestretch savings model, families weather financial setbacks and navigate unforeseen expenses much easier and without spiraling into deeper crisis. Moreover, as parents model responsible financial behaviors, they impart invaluable lessons of resilience and perseverance to their children, breaking inter-generational cycles of poverty for good.
And yet, for all that we do our programs are incomplete without Homestretch supporters. We’re proud to partner with Capital One, Blueprint Financial Group, Union Home Mortgage, Pinnacle Financial, Old Dominion National Bank, and scores of volunteers to assist clients along their journey to financial stability.
By equipping homeless families with the knowledge and skills to navigate their financial landscape, we empower them to rewrite their stories and build brighter futures for themselves and their children. Gerald* a former client said “I had so much debt coming in. And when I came out of the program, I had everything just about taken care of. And now, I am completely debt free.”
As advocates for social justice, let us continue to prioritize financial literacy as a cornerstone of our efforts to empower and uplift. To learn more about Homestretch and the services we provide, visit www.homestretchva.org today.
In solidarity,
Barfonce Baldwin
Executive Director