Tip of the Week

Financial Programs for Underserved, Underbanked Women: They Make a Difference

Women are over-represented in the low-wage workforce, with little access to workplace benefits or financial wellness programs. These low- to moderate-income women often work multiple jobs with little to no savings to show for it, and are likely to live in poverty in old age.

Despite these challenges, it is important to note that knowledge and planning can improve financial situations. When provided with a basic usable financial education, these women can better their situations. Even a minimal amount of savings beyond Social Security benefits will improve a person’s retirement security by helping them live independently with less reliance on tight government programs. With trusted guidance from people with financial expertise, these workers can become better consumers about what they need to know—and can be guided to opportunities to improve their lives by becoming emergency-fund savers, eventually moving on to open a retirement savings account, such as a Roth IRA.

In recent decades, there have been pilot programs that have helped small groups of women improve their financial situations. The success of these programs demonstrates that interested people and organizations can help them. In fact, most of the women enrolled in these programs have proven to be eager to learn how to better their finances and have been responsive to guidance. They have started saving—and then continued to save.

Research shows that when people with limited income and education take part in financial education seminars, their wealth increases—by an average of 27 percent.[i]For these LMI women and others like them, it must be accessible, actionable financial information. Educators for the Latina Savings Project, for instance, helped the women in the program to understand what they needed to know, and the importance of saving—both for the short and long term, and even given all the barriers to savings. They then helped the women define what achievable savings goals for them would be.

Encouragingly, successful model programs using financial incentives help these women better their finances. Highlighted programs are replicable for advisors as trusted messengers to provide financial knowledge designed to overcome the savings challenges by collaborating with local nonprofit organizations and financial institutions. In turn, the underserved women acquire actionable financial information and accounts to accumulate savings.


 

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