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Why Financial Coaching?

Why Financial Coaching?. Goals: Understand poverty in America The need for Coaching The benefits of Coaching. Fact Pattern – the Smith family Household monthly income is $2,000 2 children 2 cars Rent an apartment. Poverty in America. Wealth vs. Income. The wealthy vs. the non-wealthy

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Why Financial Coaching?

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  1. Why Financial Coaching? • Goals: • Understand poverty in America • The need for Coaching • The benefits of Coaching • Fact Pattern – the Smith family • Household monthly income is $2,000 • 2 children • 2 cars • Rent an apartment

  2. Poverty in America

  3. Wealth vs. Income • The wealthy vs. the non-wealthy • The 2008 recession • Building assets vs. expenditures

  4. Financial Stability Is Harder Than Ever to Achieve Weak Economy High unemployment rates and stagnant wages Predatory Financial Products Financial products designed to take advantage of vulnerable or unsuspecting Technology Spending is just a click away, making it harder to stick to a budget Risky Consumer Credit Easier than ever to take out too much debt: one bad decision can have a lifetime of consequences

  5. A Growing Problem: National The average American borrower has $10,852 in outstanding revolving debt (e.g., credit card debt), the 5th highest amount in the country. Over 12 million Americans used a payday loan in 2010. The industry has issued $27 billion in loans since the 1990s. 58% of Americanshave never calculated their retirement needs. 61% of Americans report some difficulty in covering expenses and paying bills. 55.8% of Americans have sub-prime credit scores. 24% of Americans have no retirement account (IRA, 401(k), etc) 10% of Americans with a retirement account took out a loan or hardship withdrawal against the account in the past year. 38% of American homeowners are “cost burdened” (i.e. their homeownership costs more than 30% of their income) — only 5 states have worse rates and none are in New England. Note: All data 2009 except for home ownership cost-burden (2010), credit-card/ credit score (Q3 2011), and payday (2012) Source: CFED; FINRA 2009; RI Dept of Business Regulation

  6. How Coaching Helps: BANKING BUDGETING CREDIT DEBT • Reduce expenses • Increase income • Build credit • Plan for future goals • Save for emergencies and the future • Avoid predatory services • Open a safe, affordable account • Manage & avoid debt Trajectory to Financial Empowerment

  7. LIFT Community Action Programs Junior Achievement The End CGF

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