Wednesday, November 13, 2013

Forty-five years after founding, Pennsylvania group helps future homebuyers achieve ‘financial freedom’

When visitors walk into the NeighborWorks America offices in DC, one of the first images they see is a floor-to-ceiling painting of Dorothy Mae Richardson, along with the quote, “I believe people get their roots down when they own their own houses….take pride in them. That, in turn, is good for the whole city.”

Dorothy Mae Richardson
These wise words can be generalized to cities everywhere, but in 1968, Richardson – the “founding mother” of NeighborWorks America -- was speaking specifically about Pittsburgh, where she enlisted bankers and government officials to support her block club’s efforts to improve her neighborhood. Together, they persuaded 16 financial institutions and a local foundation to put up the loans needed to create opportunities for affordable homeownership. They named the program Neighborhood Housing Services, and it served as the model for other programs that followed -- today known as NeighborWorks organizations.

Forty-five years later, the NeighborWorks network encompasses more than 240 such organizations, and the group founded by Richardson is still going strong, known as NeighborWorks Western Pennsylvania. The dynamics of the community, however, along with the services needed by residents, have changed – and the organization has adapted along with it.

“More people own their own homes here now, thanks to our efforts,” says Margie Howard, education specialist with NeighborWorks Western Pennsylvania. “But we’ve realized that more than homeownership education and counseling are needed.  Residents also need help keeping their homes in good shape, staying out of foreclosure and managing their budgets to make it all affordable. In particular, we are serving a growing number of low-income, single heads of household. Race isn’t the issue here; economics is.”

While the organization has offered financial education for youth for the past five years, recent support from the Heinz Endowments has made it possible to expand its efforts to include the entire family, combating generational poverty.

 “We saw that parents weren’t teaching their children about money management – mainly because they themselves didn’t learn it,” Howard explains. “You see lots of instances of a mom spending $300 on shoes for her child, yet there’s a shortage of food in the house, or maybe the family is about to be evicted. It’s not just about teaching parents how to budget; it’s about changing attitudes and behavior around money.”

Youth don’t get financial education in the schools either, says Howard. “Schools are test- rather than life-skills-oriented.”

One of the youth financial-education classes
The organization’s youth financial-education program enrolls participants as young as 14 up through age 25, with instruction provided in four, one-hour classes. The program’s practical approach encourages participants to analyze real-life spending choices, such as getting ready for prom.

“The average girl realizes it will cost about $3,000 for a one-day event; for boys, it’s more like $1,000.  Many are okay with these figures when it’s their parents who foot the bill,” explains Howard. “But then they are asked what will happen if their mom has been laid off, or is working a minimum-wage job. How will she afford that while keeping up with the bills? Some of the students find ways to cut back like having a friend style their hair or using a parent’s car instead of renting a fancy one. Others decide to skip the prom altogether. The goal is to teach them to analyze their wants vs.  their needs. We see how their thinking changes when they realize they might have to pay for things themselves.”

The key, says Howard, is to separate spending from emotional triggers, starting with tracking where the money is going with a daily log. Ideally, major spending decisions should be made collectively, by the entire family.  Although teenagers typically prefer to attend workshops with youth from their own age group, family members from different generations are encouraged to come to one of the workshops together. Howard recalls one time when a 10-year-old girl came with her mother to a class because she didn’t want to go to the gym with her brother. After the workshop, the little girl went up to the instructor and proudly reported that she had her own bank account. The teacher asked what the girl would do with the savings, and she replied, “I want to have a princess birthday party.”

“A 10-year-old is breaking the cycle by planning ahead to make sure she has the money she needs to meet her goals,” says Howard. “We’ve created a saver!”

Long-term results from the financial-capability workshops are still being assessed, but the anecdotes are promising. One recent evening, for instance, Howard was approached at a community event by Essence Howze, who completed the organization’s financial-education program five years before, when she was just 16. Always ambitious, Howze first began earning money at age 9, manning a refreshment stand in front of her home. “I would sell iced tea and lemonade to joggers,” she laughs.

Essence Howze
However, self-teaching could get her only so far. When she was in 10th grade, Howze saw a flyer on a bulletin board, promoting NeighborWorks Western Pennsylvania’s youth financial-education program. Howze enrolled, and the practical skills she learned, she says, enabled her to open her own savings account and enter community college, where today she is a sophomore studying business management. Always ambitious, she has supplemented her studies with extracurricular activities such as an internship with The Salvation Army’s Career Development Center, and recently started her own business -- which she calls “Silver Linings,” through which she helps others overcome personal barriers like those she faced during a troubled family life.

“Taking the NeighborWorks financial-education course gave me my financial freedom. It helped me avoid so many mistakes, and now I’m helping others,” Howze says, recalling how she showed her college roommate how to read the “fine print” when a credit card company tried to sign her up. “I refer back to the materials I got in those workshops all the time. It wasn’t just financial management I was empowerment.”

Written by Pam Bailey, communications writer for NeighborWorks America.