Five Ways to Integrate Asset Building into Employment Services for Homeless Jobseekers
By Caitlin C. Schnur, Coordinator, National Initiatives on Poverty & Economic Opportunity and David Applegate, Research and Policy Assistant, National Initiatives on Poverty & Economic Opportunity
April is Financial Literacy Month, and we believe that every person deserves the opportunity to save and build wealth across their lifetime—including people experiencing homelessness. The most recent data show that 44% of households in the United States—and 80 percent of the poorest households—are liquid asset poor, meaning they have less than three months’ worth of savings. It’s safe to assume that people experiencing or at high risk of homelessness fall into this category and face significant challenges to building savings and wealth. In addition to connecting homeless jobseekers to employment, workforce development programs can foster their clients’ long-term economic success by integrating financial literacy and asset building into their services. Wondering how? Here are five strategies to help people experiencing homelessness meet their short term economic needs and build toward future goals.
#1. Assist Clients with Obtaining Identification:
Many people experiencing homelessness don’t have a photo ID or other identification documents, making it difficult or impossible for them to open bank accounts, apply for public benefits, or gain lawful employment. Obtaining identification poses special obstacles for homeless individuals, who may be unable to prove residency because they don’t have a stable address or may be unable to afford a photo ID or the supporting documents (such as a birth certificate) needed to obtain it. It’s essential that any employment program that seeks to integrate asset building assists clients as needed to obtain these essential documents. Some states, such as Illinois, have passed legislation requiring the state to waive the fee associated with obtaining state-issued identification for individuals experiencing homelessness.
#2. Provide Financial Education and Coaching:
Financial education is the cornerstone of asset building. Components of financial education typically include introductions to bank services and credit, instructions on choosing and keeping a checking account, and techniques to track money and budget a paycheck—a skill that may be especially useful for individuals who have been out of the workforce for a long time. Low-income individuals may particularly benefit from training on how to access public benefits, avoid predatory lending, and understand credit card costs. The FDIC’s Money Smart for Adults is a free, fully scripted curriculum that covers basic financial topics. Programs may also consider offering participants one-on-one financial coaching to help clients develop realistic financial goals, hold clients accountable to those goals, and provide clients with a structured time to practice financial management skills.
#3. Help Clients Transition into the Banking Mainstream:
Using a bank ensures a safe place to store earned income, minimizes the high costs associated with using alternative financial services like check cashing services, and helps individuals avoid predatory, high-interest lenders. In 2013, nearly one-third of households with an annual income below $15,000 were “unbanked,” meaning no one in the household held a checking or savings account. Many unbanked individuals believe they don’t have enough money to maintain an account and may fear high minimum balance requirements or service and overdraft fees. Unbanked individuals may also have problematic banking histories that make it difficult to open new accounts. Programs should connect clients to safe and affordable financial services and products, such as those offered by financial institutions participating in Bank On, a national initiative to bring unbanked and underbanked individuals into the financial mainstream. Bank On financial products typically include low- or no-cost checking accounts, a low or no minimum monthly balance, and flexibility in opening accounts for individuals with problematic banking histories. If there is no Bank On program in your community, you may connect individuals to local banking institutions that offer financial products similar to those provided by Bank On participants.
#4: Develop or Encourage Participation in a Match-Savings Programs:
A match-savings program can encourage savings among low-income individuals while leveraging their income toward growing their financial assets. Assets for Independence (AFI) projects help low-income individuals save earned income in matched savings accounts called Individual Development Accounts (IDAs). While hundreds of organizations run AFI-funded IDA projects, participants generally must put their IDA savings toward achieving objectives related to acquiring a first home, capitalizing a small business, or enrolling in postsecondary education or training. While these objectives are critical for long-term financial stability, they may not align with the shorter-term but critical savings goals of individuals experiencing homelessness, such as paying a first month’s rent or reducing debt. To best serve their clients’ needs, programs may develop their own match-savings models to facilitate their clients’ savings goals. For example, as part of its IDEA Initiative, Heartland Human Care Services developed a 2:1 match-savings model in which participants can earn up to $400 in matched savings and can choose how to best use their saved money.
#5: Connect Program Participants to Tax Credits:
Individuals experiencing homelessness who earn income may be eligible for tax credits including the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). However, these workers may face barriers to claiming these credits. Individuals experiencing homelessness may not have a stable mailing address, preventing them from receiving tax-filing documents on time; moreover, they may not have a safe place to store the documents they do receive. Employment programs can mitigate these barriers by allowing participants to use the program’s mailing address for tax purposes and storing participants’ important tax-related documents. Employment programs also can connect clients with Volunteer Income Tax Assistance (VITA) program sites, which provide free tax preparation and filing for qualified low-income individuals. VITA sites are generally open from late January to mid-April and can be found with the IRS’s online locator tool.