One of the questions that we are most frequently asked at FHI is “how do you begin the conversation about money with a client?” I think this question is very interesting and revealing. Stick with me for a minute and let me see if I can work my way back around to this…
A statistic that we’ve been using in our Frameworks in Financial Health class says “61% of Americans don’t have enough money in savings to cover a $1000 emergency.” We have seen the results of several surveys that, in essence, say something similar (one survey says $400 another says $1,000, etc..). If these statistics are accurate, then it appears most Americans, not just people in poverty, have very little in cash (or liquid) savings and that is potentially very problematic.
Simultaneous to our dwindling ability to absorb economic shocks through our cash savings, there are new reports out on how much our consumer debt is growing. A report from the Federal Reserve (reported here from MarketWatch) tells us that our consumer debt has now gone over $4,000,000,000,000 – that’s $4 trillion dollars.
The inability to cover a financial emergency with cash savings leads many people to use their credit cards for emergency funds – but that is not really a strong long-term strategy. When a person doesn’t have cash or credit, then they begin to explore all sorts of interesting mental processes and behaviors, looking for solutions that don’t ultimately strengthen their financial or economic position.
The obvious concern here is that economic security and/or mobility is strained right now, but not just for the people we serve. It’s about us, it’s our neighbors, it’s our co-workers, friends and family. And, unfortunately, it feels like it has become the cultural norm.
So what can we do?
Are you financially healthy?
In January, we launched the first of a series of classes called “Conversations in Economic Mobility.” (To learn more about that class, see our last blog here). One of the first questions I asked the 25 people in the room was, “Are youeconomically mobile?”
My reason for asking is because I believe it is common in the fields of Human Services and Economic Development to really want to help others, and that is a wonderful thing. But when it comes to helping ourselves, financially or economically, do we really know how to do it?
So, let me ask you: Are you economically mobile? Or would you say you feel economically secure? Are you as financially healthy as you would like to be?
And this brings me back to the question people ask us about: “How do we begin the conversation with our clients?” I believe that its time that we stop making this solely about having the conversation with “our clients” or with “them.” It’s time to start having a conversation with ourselves, our families and our children!
I am asking that we collectively begin working on our own financial health, or economic security, or economic mobility—whatever term you choose to use. I am asking for us to commit to the process of learning to help ourselves first! Then, we will begin to understand more viscerally the complexity around our personal finances and our economic lives. And in learning about ourselves and how difficult it can actually be to shift the paradigms we have about our own economics, we can develop a deeper empathy for the people we wish to help. When we undertake the behavior changes that are needed to shift our own financial lives, we can see how daunting and difficult this process can really be.
When we have a better understanding of economic mobility and security for ourselves, then having a conversation with someone else becomes less challenging.
So where do we start? Well, there are many things we can begin working on to improve our own economic situation, but for now we’ll start with some basics.
Collecting data on ourselves
First: we begin with collecting data on ourselves! If you’ve been through our Frameworks or Bootstraps Asset Building Education programs, you are familiar with the “receipt exercise.” It’s time to take this one out, dust if off and try it again! If you have not been through our classes, I think you will find this to be a very beneficial (and only slightly painful) exercise. At a minimum, I think we should begin by collecting data about ourselves, so we can use this exercise to start a conversation with ourselves and to see how our financial resources are flowing out. In the link you will find instructions on how to do this exercise.
Additionally, we would like to invite you to take our online course called Leveraging Assets to Absorb Economic Shocks, because it is so cool and wonderful! (Use the code LEVERAGE in the store to take this course for free).
Let’s start with these items and next month we’ll build on these foundational pieces!