Financial Education: Not Enough for All Financial Problems

I believe in the importance of financial education; I am a financial educator. I believe with good information people can avoid many costly errors and utilize their money to reach their dreams and goals. But it's not enough! And, as I talked to people during Money Smart Week I realized that it may sound like I think it is. However, it's clear to me that before people can make educated decisions and use their money wisely, they need to have enough available income to be out of survival mode.

Many people in our communities are in survival mode day after day because they don't have enough money to provide food and shelter and other necessities for themselves (and their families). Financial education by itself is not going to change their situation.

In Illinois, 52% of school-age children qualify for free or reduced lunch. The numbers are even higher in our communities: 57% in Champaign, 70% in Urbana, and 78% in Danville. Think about it. Somewhere between one-half and three-quarters of the children you see walking to school or playing in our community belong to families who don't have enough money.

Minimum wage in Illinois is currently $8.25 an hour. For a full-time job, that is $330 a week or $17,160 a year. Hard to feed your family on that wage.

People don't always walk around obviously in poverty. Most people don't want others to know when they're struggling. Even when a person is working as hard as they can, or trying to find better paying work, or just doing the best they can, they often they feel ashamed or sad about being poor. Remember this the next time you start to comment on people who use food banks or other community or government services. Your words have power; use them kindly.

How do people manage? They use cost-saving tactics such as living with other family members. According to a report by Pew Research Center, a record 18.1% of the population of the United States lived in multi-generational family households in 2012, double the number who lived in such households in 1980. (For this report, a multi-generational household is defined as a household that includes at least two adult generations; for example, parents and adult children ages 25 or older.) Young adults, aged 25-34 years, are responsible for much of this growth: 23.6% lived in multi-generational households, up from 18.7% in 2007 and 11% in 1980.

At times I'm asked by someone with a limited income to help with their budget plan. Often their income is all used up once housing, food and utilities are included. And, there may not be any feasible way to decrease some of these costs. However, a budget (knowing where money comes from and what it is spent on) can be helpful at all income levels. It lets us make informed decisions when changes in expenses or income happen.

When helping someone without enough income to meet expenses, the next step is to look at available community and government services that might help to stretch their dollars such as food banks and food stamp benefits. The website can be helpful in identifying other benefits the person qualifies for such as disability, veteran, healthcare and more. But it's hard. You can add in services and still wonder, how will this person manage?

Other possible aids include adding in another job, and bartering for or trading services. More ideas are available at the Getting through Tough Times website in the section on Strategies for Spending Less. Some of these ideas are more helpful than others depending on circumstances, but I think most people will find some helpful tips.

Without a good income, managing money is extremely difficult. But people do. I get the best ideas about how to stretch dollars from people with low incomes; they do it day after day! So, I'll continue to share financial tips and strategies that I think can help families of all income levels. I do so, though, recognizing that financial education doesn't solve all financial problems.