Financial coaching—regular one-on-one sessions between a financial coach and a client to set and manage financial goals—is an effective model for assisting low- to moderate-income families achieve greater financial stability, confirms new research from the Urban Institute. NCLR, like many others in the asset-building field, has long known the benefits of financial coaching as an effective approach to help Latino families reach their financial goals and build wealth.
Over the past fifteen years, NCLR has operated one of the most successful HUD-certified housing counseling programs in the country, with a culturally competent, bilingual model to helping low- and moderate-income Latino homebuyers and renters. Our one-on-one counseling approach is a proven success and we have adapted it to develop a financial coaching program, which helps Latino families who are still struggling to recover from the Great Recession.
As has been well-documented, communities of color were disproportionally impacted by the recession. Unemployment rates hit 13.1 percent in November 2010, and Latino median household wealth fell 66 percent from 2005–09 according to the Pew Hispanic Center. The loss of wealth and other financial strain caused many Latinos to fall out of the financial mainstream during the recession, leaving Latino families vulnerable to alternative financial services that are often more costly and sometimes even predatory. Latinos and other communities of color face an array of challenges that perpetuate their financial strain and instability, including underemployment, lack of retirement options, high student debt, language barriers, and legal status.
Finding reliable financial advice is difficult, but when combined with language barriers and other challenges, it’s even harder. To create access to quality financial coaching for low-income Latino families, NCLR built a program where Affiliates throughout the country combine financial capability with other community-based services such as health, workforce development, and legal assistance.
In one example, low-income clients who seek legal services will receive U.S. citizenship application assistance and financial coaching on money management, debt, savings, and credit-building. Felicia Caraballo, an immigrant from the Dominican Republic, originally went to NCLR Florida Affiliate Hispanic Unity for help with her citizenship application. At the same time she received information about the qualifications for citizenship, she received basic financial education about savings and credit. Caraballo attended subsequent one-on-one financial coaching sessions where she learned she had a good credit score, set a savings plan for her citizenship application fee, and opened a money market account to save for a house. She became a U.S. citizen on February 13, 2015 and hopes to purchase a house in 2016.
The Urban Institute study provides data to support the successes we see on the ground, like those of Felicia Caraballo. Financial coaching empowers Latino families to make informed decisions about their financial future, but it is not a silver-bullet solution to Latinos’ wealth-building challenges. NCLR will also continue its advocacy for increased access to safe and low-cost financial products, as well as a financial regulatory environment that provides safeguards to assist Latinos in bridging the racial wealth divide.