Grab a shovel and dig out of financial hole

Here’s a quote to live by: If you find yourself in a hole, stop digging.

But is it really this easy when it comes to your finances? What if that hole represents rising rent you can’t afford? Or that increases in your salary — if you’ve even gotten any — haven’t kept pace with inflation? Or a mortgage that is underwater and you can’t refinance to reduce your monthly payments?

What if you are about to dig that hole deeper because you and your child have decided the only way for him or her to go to college is to take out student loans?

With so much of this proverbial dirt to shovel, you may not see a way out.

And then comes April — a month of reckoning.

It’s designated as “Financial Literacy Month,” or “National Financial Capability Month.” It’s when programs and proclamations tell you what you should already know, which is that you have to save, invest, use credit wisely — and sparingly — and spend well.

“Critical decisions — from financing higher education to saving for retirement — can have lasting consequences for individuals and for our country’s economy,” President Obama said in helping launch this year’s effort. “Financial literacy enables people of all ages to make smart choices and set goals to protect their hard-earned income.”

The president made a special note that financial literacy will aim to help “open doors into the middle class” and that it’s “an essential component of middle-class economics.”

After all, that is the American Dream: to at least climb your way up to the middle class.

There are surveys that might not make you feel particularly good about your money management. Take a look at some of the findings from NeighborWorks America in its second annual financial capability survey:

Thirty-four percent of adults in America don’t have any emergency savings. That’s an increase from 29 percent a year ago.

The percentage of adults who said saving for emergencies is an important financial goal dropped to a disturbing 1 percent, from 5 percent a year ago. Even if you don’t have the money to put aside for an emergency, you ought to have that as a major goal.

There was an increase in the percentage of people — 47 percent, up from 41 percent — who had enough saved in an emergency fund to carry them for at least three months. But, as NeighborWorks points out, the average unemployed person was out of work for 31 weeks.

People who earn more money typically have more to save. But even among the folks who earn a lot, there’s much room for improvement. About 19 percent of people making $100,000 or more per year said they have no emergency fund.

But here’s the thing. If you’re in a hole, you have to believe you can climb out. You have to take responsibility for whatever you can do to lift yourself up. You may not be able to get better pay immediately or find a more affordable apartment or refinance your mortgage, but you can learn to resist the tricks employed by retailers, credit card companies and other financial institutions. You can figure out the steps to better credit, so that when you need it you pay less. You can learn to make better financial decisions so that you can maximize the money you do have.

You can climb out of that hole by getting some financial coaching. Let me be clear. The compassionate thing to do is to assist those who are barely making a living wage. Because to just tell them they need to build a savings cushion when they can’t pay for necessities isn’t helpful. Part of helping them is supporting and financing community-based programs that provide financial capability services or coaching.

NeighborWorks, which supports nonprofits around the country that offer such programs, has found that coaching works. Yet many people don’t know there is free or low-cost nonprofit financial capability help in their communities.

You can start your search on NeighborWorks’ site (neighborworks.org). Click the link for “Our Network.” Then select “Network Directory.” Search using your ZIP code. Not every local group listed will offer financial coaching but ask around for ones that do. Contact the Local Initiatives Support Corporation (lisc.org), which has a network of “Financial Opportunity Centers.”

“Working with a certified, nonprofit financial coach to lay out a road map for success is more important than ever, especially for the low-income families with whom we work,” said NeighborWorks president and chief executive Paul Weech.

Think of a financial coach as a hand up, to help you climb out of the hole and put you on the way to better money management.

(c) 2015, Washington Post Writers Group

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