Once a Spender, Now a Saver

Erik Murudumbay is a 19-year-old college freshman and, like many people his age, he hasn’t always been great at managing his money. In an effort to ditch bad spending habits, he enrolled in AAFE’s Financial Future Program (FFP) – It pairs volunteer coaches with clients from low to middle income households, and provides them with free financial coaching. The key word here is coaching: The FFP supports clients and guides them towards better spending habits, rather than being prescriptive. This instruction style immediately struck a chord with Erik: “The idea of having someone in my life who wouldn’t force me to take specific action or tell me what to do, but would lead me and make sure I wasn’t on my own sounded appealing to me,” he said. Through the use of powerful questions, Erik’s volunteer coach, Manni LaJeunesse, a social work intern at AAFE, led him to think deeply about what he was spending his money on, and whether his spending habits were fulfilling. Erik admitted that most of the money he spent went towards video games; around $90 each month. “I realized that my over-spending stemmed from the fact that I had a lot of free time, and was spending 2-4 hours a day playing video games. This ended up draining all of my money, and my free time,” he said. Erik and Manni brainstormed creative ways in which he could be using his time, and he has been implementing these ideas. Erik is now taking salsa classes, which cost $30 per month and take up 2-3 hours per session. He bought free weights, $7-$10 each, and has been using them to exercise at home. He has also been going to the library to do homework, and help his younger sister with her school work.  “She has been enjoying completing projects more, and loves that I’m spending more time with her,” Erik said. The impact is clear: Erik’s time spent playing video games has been cut down to less than an hour per day. He spent $40 last month, down from an average of $90 per month. Not only is he saving more, Erik has also found that other aspects of his life have gotten better: His performance in school and at work has improved, and he is a much happier and healthier person overall. Now that he is in control of his spending and other aspects of his life, Erik can start thinking more towards the future and investing his money. Putting care and thought into spending has allowed him to focus on putting money into his savings account. Although he had a savings account before the program started, he would withdraw from it frequently; he’s now depositing $100-$200 each month and isn’t touching the balance. Erik is proud of himself for taking that all-important first step, and enrolling in the FFP. He also recognizes how he has changed since joining the program: “Before, I would take a few steps and then go back to old habits quickly, but now my mentality has changed. When I set a goal, I can keep going until I reach it. I feel like a different person,” he said.

This article was written by Nelly Kucher, an AmeriCorps VISTA Financial Future Program Coordinator. For more information about AAFE’s Financial Future Program, or to learn how to become a client or a volunteer, contact Nelly at nelly_kucher@aafe.org.

What It Means to be Creative, Resourceful, and Whole

At the Connecticut Association for Human Services (CAHS), we like to practice what we preach. As the Director of Family Economic Success (FES) programs, it brings me great joy to take time off from my day-to-day responsibilities to volunteer as a financial coach in the Financial Opportunity Corps (FOC) project. In this role, I work 1:1 with an economically disadvantaged person (we refer to as the “participant”) to provide him or her with meaningful support toward fulfilling their financial goals. Thanks to Points of Light and Bank of America, I participated in several hours of volunteer training in preparation for my meeting with a participant. In February 2015, I met participant Linda R. Linda is a middle-aged divorcee and mother who works both full-time as a preschool teacher and part-time in a low-wage service job. She is very passionate about her teaching work and has been in the field for 25 years. Linda lives with her daughter who is an adult and was recently laid off from her job. When her daughter became unexpectedly unemployed, Linda enrolled in the FOC to get help with managing her household finances. During our first meeting, which is designated as our “Specific, Measurable, Attainable, Realistic, Timely (SMART) Goal Setting” session, Linda explained that she did not have enough income to pay her bills and she needed to “build a savings”. During that session, Linda seemed very disoriented about her finances and under-confident in her ability to pay her bills. One recurring issue she expressed was “I save money, but I have to reach into my savings to pay my bills!” Through powerful questions, effective listening, and a sharp adherence to the C.O.A.CH model, some key things I learned in the first session were that:

  1. Linda does practice some great financial behaviors
  2. Linda does not have a budget
  3. Linda is creative, resourceful, and whole

The 3rd point is probably the most poignant. I learned Linda’s competencies as well as her perceived obstacles by her own admission. She had the answers to her “problems” and my role in this process was not to tell her what to do or how to do it, but to help her develop the confidence to do what she already knows and serve as both thought partner and motivator. At the end of our first session, Linda established a SMART goal – save $600 in 6 months by saving $100/month every month using direct deposit. To start the process, Linda agreed to participate in a free budgeting class. During our second meeting, Linda indicated that she completed the budgeting course and put together a draft budget on her own. Our goal in the second session was to review her income and expenses. Linda discovered that:

  1. There were ways to increase her income
  2. There were ways to decrease her expenses

We exchanged ideas with methods and strategies that Linda could use to improve her cash flow.

  • Linda spends $14 a week on coffee at Dunkin Donuts. The $2 a day she spends is usually on her way home from work and is a “gift” to herself after a long day. However, we also discovered that she purchases a cup a day on the weekends as well. Linda determined that one effective way to decrease the expense is to avoid buying coffee on the weekends.
  • Linda spends $140 on dining out at least twice a week. By the conclusion of our session, Linda decided that she would explore some cheaper dining options that would bring her expense in that area down substantially.
  • Linda spends $100/month to purchase supplies and games for her preschool students. This is an area where Linda feels very passionate. Linda also spends over $100 per month on a storage facility, which she uses to keep her collection of preschool supplies from years past. Recognizing that this is Linda’s passion, we explored some options in this area including comparison shopping to determine if she was receiving the best deal on a storage facility, reusing materials and supplies from the storage facility as opposed to buying new items for the class, and researching grant opportunities for teachers – so she can get some financial assistance in this area.

By the conclusion of our second session, Linda agreed to explore more informal and formal methods of increasing her income and reducing her expenses. Linda expressed to me that she enjoyed the idea sharing and that there were many things she “never thought of doing” to improve her financial situation. I am indeed looking forward to our next meeting. For me, I was simply impressed with Linda. Our conversation was great and she really seems dedicated to the process of Coaching. I can honestly say that the FOC training equipped me well for this experience and I did not feel compelled to be the expert in Linda’s life. Linda is the true manifestation of what it means for a person to be creative, resourceful, and whole. All she needed was some good conversation, a little light, and the confidence to get started on the pathway to her goals. I am proud of Linda and I am proud to be a volunteer for this amazing program. Check back in with us in 6 months!

-Jamal Jimerson, Volunteer Financial Coach

*Update as of April 14, 2015*

I just completed another phone coaching session with Linda R.  Linda’s initial financial goal was to save $600 in 6 months.  Through coaching we discovered that Linda does not have a balanced household budget.  In March, we discussed methods of decreasing expenses, for example reducing her Dunkin Donuts consumption.  Linda informed me that over the last month she has reduced this expense and her $100/month preschool materials expense. This was great news and is excellent progress for Linda.  Since she started financial coaching in February, Linda has saved a total of $100.   However, she told me that she will need to reduce her savings contribution in order to balance her budget even further.  Through coaching we agreed that she should adjust her savings goal to make it more realistic. We agreed that she will create a month-to-month budget and email the April/May budget to me by the end of this week.  This budget will reflect her adjusted savings contribution.  For the next 6 months, she will more than likely save about $50 each month.  We’ll be checking in informally through email and formally by phone mid-May. 

6 Months, 3 Goals, 1:1 Coaching

Unreliable transportation, lack of health and auto insurance, and high student loan debt weighed heavily on Delessa when she learned about the Financial Opportunity Corps, with Accounting Aid Society in Detroit, Michigan in partnership with Bank of America and CNCS. When asked about why she started with the financial coaching program, she responded, “I felt lost and needed direction. I was always told to save money, make a budget, fix your credit, but I had so many issues that I didn’t know where to start.”

Delessa was partnered with a volunteer financial coach, Howard, and promptly began working on budgeting, money beliefs, and SMART goals. Through those financial coaching tools, Delessa was able to pinpoint which goal she wanted to achieve first: purchasing a new car. Delessa and her coach examined her income and current expenses, and calculated her maximum payment per month ($225). “My coach is a coach, he gives me the tools needed…and leads me in the direction I need to get the job complete and I accomplish the goal.” Now she was able to reach a big milestone; buying a new car. An opportunity to purchase a relative’s car for $3,000 arose. This option was far cheaper than her maximum budget of $15,000 for a new car. Now presented with different circumstances, she and Howard returned to the money beliefs and wheel of money/life tools, in order to prioritize her wants and needs. “I did a priority of list of wants and priority list of needs, and I only focus on a few at a time (2-3).”

Using those tools, Delessa made the choice to purchase her relative’s car. She also purchased health and auto insurance, and now has reliable transportation. In six months Delessa and her coach Howard achieved goals and reached milestones – but Delessa isn’t done yet. She and Howard have decided to partner past the 6 month mark, and set new goals and milestones for Delessa to conquer, “Now I’m working on completing taxes, tackling student loan debt and paying off $3,000 – 5,000 per year to lower her debt balance.”

-Kelsey Budnick, AmeriCorps VISTA Member