Money matters: Tips from financial literacy gurus

When the Oregon Legislature removed personal finance from high school diploma requirements and lumped it in with social sciences, they inadvertently created a gap in public education. 

That was nearly 32 years ago, and now Oregon ranks 28th in financial knowledge and education, according to WalletHub’s 2018 survey. Last year, Champlain College gave Oregon a C grade in high school financial literacy, and while those scores aren’t the worst, the competition isn’t stiff. Just five states received an A grade, and a 2016 Financial Industry Regulatory Authority Inc., or FINRA, study based on a survey of more than 27,000 people found two-thirds of Americans can’t pass a basic financial literacy test. Oregonians scored lower than the national average. 

This overall lack of money-management prowess became apparent to Melody Bell when she was working in the insurance and credit industries. This prompted her to found Portland-based nonprofit Financial Beginnings in 2005. With a master’s in finance and a Ph.D. in educational leadership and administration, Bell was able to craft a well-rounded financial education curriculum for high-schoolers, and volunteers with her nonprofit began to deliver much-needed financial instruction to Oregon classrooms. 

Seven years later, Bell worked with the Legislature to reintroduce financial literacy standards to Oregon’s high schools. However, the state does not provide teachers with curriculum to teach their students, and there is nothing in standardized testing that tests for those standards, said Tom Moosbrugger, development director at the nonprofit’s new iteration, Financial Beginnings Oregon. The Oregon office has become one of two affiliates of Financial Beginnings USA, which Bell now heads up in an effort to take her financial literacy programming nationwide. 

Today, Financial Beginnings Oregon has an expanded mission, bringing free financial literacy training to elementary, middle and high schools, as well as to adults, with a focus on teaching low-income Oregonians. It brings classes to women in prison, people experiencing homelessness, and refugee and immigrant populations, as well as to any other community that requests a lesson about the do’s and don’ts of money management.

Classes are taught by volunteer instructors, many of whom are financial institution professionals. During its most recent fiscal year, Financial Beginnings Oregon had 268 active volunteers who reached more than 31,000 students in 18 counties. 

It’s the only organization in the state focused on teaching young people financial basics. 

“But we’re not in every elementary school in the state,” Moosbrugger said. “There’s a lot more work to be done.”

For Kate Benedict, Financial Beginnings Oregon’s executive director, financial literacy is also a public health issue. 

“Financial health is one of the biggest social determinates of health, but we don’t talk about it the same way we talk about other public health metrics,” she said. 

Street Roots recently sat down with Benedict, Moosbrugger and four volunteer instructors at the Financial Beginnings Oregon office in downtown Portland. We asked them how low-income Oregonians can stretch their dollars further, build better credit and budget for the future. They shared a wealth of advice, from tips and financial basics to their favorite podcasts, apps and books. Here’s what they had to say:

Meet the instructors

Mary Vasquez

Community advocate at Point West Credit Union

Mary’s family moved to the U.S. from Mexico in 1997, and, like many Latin American immigrants, they weren’t familiar with banking, credit scores and other fundamental financial systems. 

“A commitment for me, for Financial Beginnings, is to be out there and help our community understand all about finances and about credit cards,” she said. “Like my dad, for example, he never knew what to expect or what to do with his money. And so concentrating a lot on the Latino community is one of my No. 1 goals.”

Financial advice Mary gives her friends and family: If you don’t need it, don’t buy it.

Farhad Dadkho

Commercial loan officer at Riverview Community Bank in Vancouver; Financial Beginnings Oregon board member

Farhad immigrated to the U.S. from Iran in 1994 and teaches classes for Financial Beginnings Oregon twice a week.

“I volunteer because I want to make an impact,” he said. He prefers teaching at high schools in low-income areas and immigrant and refugee populations, frequently teaching at Immigrant and Refugee Community Organization.

Financial advice Farhad gives his friends and family: The biggest thing is budgeting. You know what Google is? You know how there are a bunch of little dots on the right hand side of the website? If you click one of them, it’s called Google Sheets. Click on it and set up your own little budget.

Kevin Moran

Community relations officer at Clackamas Federal Credit Union

Kevin is a first-generation American who grew up explaining bills and their due dates to his Mexican parents. 

“We have a lot of family friends that are in poverty,” Kevin said. “Being able to talk with them and hear their story about how they’re still going and facing that financial struggle, it creates more passion for me to go and teach in the classroom.”

Kevin’s been teaching classes for three years and coordinates instruction for Clackamas County.

Financial advice Kevin gives his friends and family: Create a budget. It doesn’t matter if you’re low income, middle income, high income – it’s so important.

LaShanda Friedrich

Research analyst at Oregon Health Authority; Financial Beginnings Oregon board member

LaShanda became passionate about finances when she discovered Dave Ramsey, a financial advice author, and began taking steps to pay down her debts. A self-taught financial aficionado, LaShanda said what she learned made such a difference in her life that she wanted to share it with others.

“My favorite piece is the black empowerment piece. A lot of my people do not get this message, and we’ve just been so economically disenfranchised,” she said. 

She tells her students, “Even in this system that we live in, you can still make it.” 

Financial advice LaShanda gives her friends and family: Have an emergency fund. In your season of plenty, be ready to store.

How to avoid overspending this holiday season

Instructors at Financial Beginnings Oregon recommend setting a strict budget for holiday spending, and sticking to it. 

One way to do this is to put the cash amount you can afford to spend on gifts this year in an envelope. This is called the “envelope method,” developed by investor-author Dave Ramsey. 

“Once it runs out, it runs out,” Kevin Moran said.

Kevin also recommended careful consideration when buying big-ticket items, such as electronics. The TV or smartphone that’s on sale during Black Friday might not be the great buy you think it is. They might be last year’s model, and stores are likely clearing them out to make room for new models that will hit the shelves in early 2019.

“I think that we’ve come to a time where we’ve really forgot what the holidays are all about,” Mary Vasquez said. “It’s so nice to do stuff, to make something, to make cards, to make scarves, and it’s something you can do as a family. And it’s fun.”

Kevin agreed. He usually makes tamales for his friends and family, along with handmade gifts. 

LaShanda Friedrich limits her gift-buying to close family and her godchild. 

“Tell people straight up, don’t buy me anything because I’m not going to buy you anything,” she said. 

Kate Benedict suggested shopping at thrift stores, or investing in a child’s 529 college savings plan. Just $20 each year can grow to more than $1,000 for their education once they’re grown, she said. Visit Oregon Savings Network to learn more.

And to make next year’s holiday budgeting even easier, buy gifts when they’re on sale in January.

The do’s and don’ts of budgeting

One thing instructors hear from students frequently is “I can’t budget. I’m on a fixed income.”

“If you have income and you have expenses, that’s a budget,” LaShanda said.

“A budget is really a plan for your money,” said Kate. “It’s not really restrictive, or this oppressive thing. It can instead just be building your awareness so you have an idea of where your money can take you.” 

To create that plan for your money, pick a time period – one month is a good place to start – and then identify all your expenses and your planned income. Enter it into an app, spreadsheet or software program to see where your money is going and to better assess your spending habits. From there, you can set goals and target certain expenditures for elimination.

One of the staples of their curriculum is centered on separating your needs from wants. The needs should go into the expenses listed in your budget, and the wants fall into the category of goods you can buy after your needs are met – needs that include savings for retirement or your emergency fund.

Deciding what to save for is a personal decision, based on what’s most important to you. Kevin, for example, has an emergency savings account for his dog. “Because I love him that much,” he said.

When creating a budget, the team agreed it’s important to be honest with yourself. 

Farhad said most people aren’t realistic about what they actually earn, choosing to focus on their gross salary before taxes rather than what’s actually on their paychecks. He said people need to have realistic goals. 

“That’s the biggest thing in America that I’ve seen, people don’t want to realize what they actually make,” he said. “That’s why they overspend on Black Friday and things like that.”

He said first, look at what you actually make, then divide it into categories for spending. 

He and LaShanda recommend Google Sheets as an easy platform for organizing your budget. 

Kevin said he tells people who are new to budgeting to try saving all their receipts for one week. 

“It doesn’t matter if it’s coffee or bills. After that week, analyze the receipts. Then you can see in a week how you’re spending your money,” he said.

This will give you an idea of where you could be spending less and saving that money instead. 

“If you just track your expenses, you’re not looking at where could I be saving more, and where could I be building that emergency fund,” Kate said. 

She said you need to pay yourself first. Make a goal for savings, whether it’s to have that emergency fund, saving for home repairs or starting a college savings account, and put the money toward that goal first. 

“You can only spend what you have left,” she said.

Farhad said he can usually illustrate how easy it can be to find savings when looking around at any given group he’s teaching – someone always has a Starbucks or other premium beverage.

“Why don’t you buy a pound of coffee for $6 that will last you a whole month,” he tells them. 

LaShanda uses the envelope method for sticking to her budget. While bills come out of her bank account, she’s budgeted a $150-per-week allowance for both her husband and herself. Groceries and other expenditures she’d typically swipe a card for are taken out of this allowance, which she keeps as cash. 

“Debit cards are like death by swipes,” she said. “Cash holds you more accountable because it’s more painful to hand over. If I want to go to Lululemon and buy some $100 yoga pants, it’s painful to hand them five $20 bills, versus me swiping the American Express.” 

You also have to think about what’s important to you, Mary said. Think about what habits you are willing to change, and don’t forget that you still need to reward yourself. 

Don’t stop drinking lattes if that’s something you enjoy. Instead, try limiting yourself to one per week, and use a punch card so you get that freebie once in a while. If you’re too strict with your budget, you could end up missing out on the fun things in life. 

LaShanda recommends identifying clearly-defined goals: “What do you want for yourself in this life? What are the steps? Come up with an action plan for how you can get there.”

There’s an app for that

Don’t want to spend all day punching numbers into a spreadsheet? There’s an array of budgeting apps that can do the work for you.

Instructors at Financial Beginnings Oregon recommend Mint, a free app from the makers of TurboTax and QuickBooks. It will integrate your bank account information so that when you make a purchase, it’s automatically entered into your budget.

EveryDollar was also recommended. It will allow you to create a budget within as few as 10 minutes, but it has fewer features than Mint. 

Kate recommends Personal Capital, which also ties in your debt and assets, allowing you to get an idea of your net worth and better track long-term goals. 

Farhad, on the other hand, steers clear of any app that asks for his bank account information, for security reasons. 

“You don’t know what kind of systems they’re using,” he said. “It could be an office of four people running a multimillion-dollar app.” 

Popular financial apps that were not suggested during our roundtable but are highly rated include Acorn, which rounds up after every expenditure and invests your “change” in an IRA, and YNAB (You Need a Budget), which requires that you manually import your spending at the end of each day. While this takes more legwork than apps like Mint, it can create more intentional spending habits.

Building good credit 

First and foremost, you need to get ahold of your credit report and learn how to read it. You can get a free report at Annual Credit Report.com.

Your score can range from 850, which is excellent, to 300, which is the lowest. Anything over 700 is considered good.

There are three different credit agencies: Equifax, Experian and TransUnion. Some items, such as outstanding bills and other debts, may show up on one report but not another. 

Your credit score is based on a combination of factors: Your payment history accounts for 35 percent of your score, the amount you owe accounts for 30 percent, the length of your credit history accounts for 15 percent, opening new accounts affects 10 percent (too many too fast is a negative), and the diversity of your accounts is another 10 percent. 

Mistakes that negatively affect your score include maxing out a credit card, making a 30-day late payment, entering into a debt settlement, foreclosure and, worst, bankruptcy. 

But don’t despair if you have a bad score. Help is out there; you just need to ask for it.

“What I’ve seen a lot with our community, specifically, is they’re so embarrassed to come and ask for help,” Mary said of the Latinx community. 

At her credit union, she said, there are programs to help members pay off collections, give them check assistance and pay off high interest rates on credit cards. Credit unions will often be willing to pull members’ credit reports when they open an account and help them identify problems, she said. 

While credit unions, which are nonprofits, can give their members financial advice, traditional banks cannot.

Keeping track of your credit is a good thing, but don’t pull your credit more than three times per year. That will hurt your rating. Instead, you can track your credit at Credit Karma; however, it might not be 100 percent accurate. 

Once you can see what’s on your report, you will know if there are old bills in collections you didn’t know about and if there is any fraudulent activity you need to address.

The worst mark on your credit is anything that’s gone to collections, Kevin said. Take care of those debts first. 

One of the biggest mistakes people make with credit cards is paying their minimum balance each moth and believing that’s going to eventually pay off their debt. 

“If you have a bunch of credit cards, and you’re just paying the minimum balance, you’re incurring more interest on the credit cards than you’re paying in principal, so in essence, you’re digging yourself into a hole,” Farhad said. 

If you’ve made this mistake and need to dig yourself out, he said, start by paying all your minimum amounts due – you don’t want to miss any payments – but also put as much as you can in extra payment toward the smallest debt each month. The extra money you spend goes toward paying off the principal. Once that debt is eliminated, work your way up, paying extra to pay off the next-smallest debt. 

With credit cards, you shouldn’t spend any more than you can afford to pay off at the end of each month. This is because you want to avoid paying interest. This will build your credit without adding debt. 

“Being in the financial industry for 11 years, I’ve noticed that (most) of the money that is spent is on paying high interest,” Mary said. “Unfortunately, a lot of the people that are paying high interest are people that are going into financial crisis, people of color, the underserved populations.

“My advice is to learn about your credit. To really take care of your credit. That is the only thing that belongs to you. You share your home, you get married, you share kids, but your credit is your credit. That would really save a lot of money for you. Really understand credit, and build really strong credit.”

Educate yourself

Several Financial Beginnings Oregon instructors recommend that financial novices begin to take control of their money by reading Dave Ramsey’s “The Total Money Makeover.” It breaks down financial planning into easy-to-follow steps and serves as a useful tool for those who have problematic debt and low credit scores and those who just want to learn more and get ahead. 

LaShanda also recommended Rachel Cruze’s book, “Love Your Life, Not Theirs,” for finding contentment with what you have in an age where social media exacerbates our keeping-up-with-the-Joneses tendencies.

But don’t break the bank buying financial self-help books. “Go to the library and get tons of free reading resources,” LaShanda said. “That’s how I started.” 

And don’t be afraid to start with the basics. Kate said there are some children’s books about money that can be just as helpful for adults. 

LaShanda said she also reached out to people in her life who had “made it,” asking them how they got there. Finding that financial mentor is another way to learn, but be wary of advice from non-experts.

There are lots of online resources anyone can tap to learn more about financial planning, budgeting and retirement savings, as well.

At 360 Degrees of Financial Literacy, a program from the American Institute of CPAs, you can learn more about retirement planning, investing and find other helpful tools, including a “Disasters and Financial Planning” guide from the Red Cross and National Endowment for Financial Education.

Farhad said he likes to listen to podcasts such as NPR’s “Planet Money,” “The Epic Real Estate Investing Show” and Rod Khleif’s “Lifetime Cashflow.” They’re all free and will help you up your financial game. But, he said, take their advice with a grain of salt. What works for them might not be right for you. 

Mary recommends asking your financial institutions what programs they offer. They might have a program that can help you get out of debt and start saving and investing for the future.

There are also an array Individual Development Accounts (IDAs) available to low-income Oregonians. They will match your savings up to $3 for every dollar you save. These programs are designed to save for homeownership, business start-ups, education and home repairs. Visit Oregon IDA Initiative’s website to learn more.

Over 40, low income, no retirement savings. Now what?

You’ve probably heard it before, but stop making excuses and start saving now.

“No one is exempt from math,” LaShanda said.

While you may not think you can afford to put any money away, once you start budgeting, you’re likely to find there are some small, recurring expenses that you can cut out, which will add up over time. 

That, LaShanda said, is called the “latte factor.”

She said the latte factor shows that even a teacher or a janitor can eventually become a millionaire. 

“It’s not about how much you make; it’s about how much you save. Can you give up that $4 drink per day to retire in comfort?” she asked.

“Start now,” Kevin said. “Look at the resources in the community. You can ignore it, but it’s going to hit you real hard once you’re done working. It’s real important you understand the resources around you.”

Looking at your finances holistically is also important. People think they might be getting ahead by having an IRA, but then they ignore old medical bills, Farhad said. “You gotta pay those off. 

“Also, people keep renting rather than buying a house,” he said. It might make sense to tap into that 401(k) early so you can purchase a house because you’ll get more in the end if you do that as opposed to paying rent for the rest of your life, he said.

Ask your financial institution what plans they offer, and shop around for the highest dividends.

As of October, Oregon’s statewide retirement plan is open to the more than 1 million Oregonians who don’t have retirement options through their employer. This program will deduct a percentage from your paycheck or take payments from your bank account and put that money into a Roth IRA retirement account that includes a capital preservation fund, a mix of target-retirement-date funds and a growth fund. You keep the account, even as you move between jobs, and you can access your money any time. However, like any investment strategy, there is inherent risk. Visit oregonsaves.org to find out if this plan is right for you.

In order to save as much as you will need to have the retirement you want, you might need to get a second job. 

“Sometimes you just have to get more income if you’re not able to save,” LaShanda said. While that’s not an ideal solution, it’s better than living out your golden years in extreme poverty. 

LaShanda recommended reading some literature from best-selling financial how-to author David Bach. His book “Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age” was written before the Great Recession, so some advice within it is dated, but there are still helpful strategies for getting your income on track. 

Chris Hogan, another personal-finance guru, offers a series of how-to books and an online tool, Retirement IQ Assessment, that will tell you how much you need to save each month to meet your retirement goals.

Become an instructor

Help Financial Beginnings Oregon reach more classrooms by becoming a volunteer instructor. You don’t need to be a financial professional to teach the curriculum, although you will need to study the material before giving your first class. There is no minimum time commitment, but Financial Beginnings Oregon asks that instructors try to teach at least four to five classes per year. Classes are typically 90 minutes long. If you want to learn more about becoming a volunteer instructor, email volunteer manager Jazmin Roque at jazmin.roque@finbegor.org.

Email Senior Staff Reporter Emily Green at emily@streetroots.org. Follow her on Twitter @greenwrites.

Street Roots is an award-winning, nonprofit, weekly newspaper focusing on economic, environmental and social justice issues. Our newspaper is sold in Portland, Oregon, by people experiencing homelessness and/or extreme poverty as means of earning an income with dignity. Learn more about Street Roots

This article appears in 2018-11-23.