NEW YORK — A new report examines the financial lives of the very poor, those with annual household incomes below $20,000.
Released by the National Federation of Community Development Credit Unions and titled "From Distrust To Inclusion: Insights Into The Financial Lives Of Very Low Income Consumers," the goal is to investigate how socially-minded financial institutions could best meet the needs of these consumers."
In its study, the Federation features interviews with people at four financial institutions that serve the very poor: Community Check Cashing in Oakland, Cal.; Guadalupe Credit Union in Sante Fe, N.M.; Self-Help Community Trust/Prospera in San Jose, Cal.; and St. Louis Community Credit Union.
"Many of the very low income people we interviewed found their way to a participating financial institution because they were experiencing a financial crisis or a life crisis with financial implications," the study quotes Kirsten Moy, senior fellow with the economic opportunities program at the Aspen Institute, as saying, "It was only after their immediate crisis had been resolved that the very low-income consumers we interviewed were receptive to more traditional financial solutions like counseling, budgeting or saving. Very low-income consumers were only able to move ahead when a trusting relationship was developed with the staff of the credit union."
Other findings regarding the realities of the lives of those in the study:
- Instability and volatility of income is the norm for these consumers.
- While very low-income consumers are aware of and access information through mobile technologies, few trust making decisions or transactions via mobile platforms.
- Very low-income consumers still depend largely on cash.
- Traditional budgets are not helpful in managing household finances, as products and services must fit within the context of a very low income person's life, not just their financial profile.
The Federation noted that 12.7% or approximately 37-million Americans live below the poverty line. The study was underwritten with funding from the Ford Foundation and the Annie E. Casey Foundation.