Jeffrey Williams opened a bank account for the first time at the age of 46.
It took some courage. His employment history was spotty. He didn’t know how to write a check. When he got a steady job a few years ago, he was still paying $6 to $8 to cash a $300 to $400 paycheck at the grocery store or Regina Check Cashing on State Street. A friend suggested he open a bank account.
“I was scared to death,” said Williams, now 49, of Schenectady, while seated in his Hamilton Hill apartment. “I had trust issues. Nobody was going to hold my money like I would hold it.”
He recalled his first trip to the SEFCU branch in his neighborhood.
“I was outside of my realm,” he said. “I was walking into a bank and handing my money to a person I didn’t know.”
Williams’ financial education was only beginning.
Last fall, he graduated from an 11-week pilot program on financial literacy sponsored by the Hamilton Hill Neighborhood Association and the Weed and Seed program in Schenectady. It marked the first time the neighborhood association sponsored a financial literacy program; a second series of classes is scheduled for March. Four people graduated from the first course, which used a curriculum developed by the Federal Deposit Insurance Corporation and brought in people from SEFCU and KeyBank to talk to participants.
The course, which focused on money management basics such as budgeting, saving money and understanding and improving credit, promoted financial stability as a way to attain the hallmarks of the American dream: a car, a house, a college education.
Recently, Williams showed off a thick binder stuffed with information from the course; he recited a lesson from a session titled “Pay Yourself First.”
“When you get a paycheck, instead of it all going to a bill, put something aside for yourself,” he said. “It will make you feel a lot better about yourself, about working, if you give yourself something. ... It made me feel better.”
Financial literacy programs are becoming more common as banks, credit unions and community organizations join forces to help people with little or no banking history move into mainstream financial institutions and begin the process of building wealth. The idea is that education can make them savvier when it comes to handling their money and less likely to be fooled by financial scams and predatory lenders.
Banks move closer
In recent years, SEFCU has opened branches in underserved neighborhoods in an effort to reach this potential customer base.
Schenectady-based Sunmark Federal Credit Union launched its financial literacy programs several years ago and has partnered with local groups and organizations such as the Schenectady Municipal Housing Authority, Better Neighborhoods Inc. and the YWCA of Schenectady.
In 2007, KeyBank opened a financial education center in downtown Albany, but only a quarter of KeyBank’s financial literacy courses are held at the center. The rest are taught at various sites throughout the Capital Region.
In 2001, a SEFCU branch opened in Hamilton Hill; three years later, SEFCU opened a branch in Albany’s Arbor Hill neighborhood, marking the first time a bank had a presence in the area. Last summer, SEFCU opened branches at the Albany Housing Authority, a Price Chopper in Slingerlands and the site of a former fast-food restaurant in Troy. Staff are trained to deal with the concerns of people with little banking experience.
“We were trying to serve the underserved before, but without a physical presence,” said Michael Castellana, president of SEFCU.
But SEFCU’s efforts to reach the unbanked go beyond bricks and mortar to education and outreach.
The credit union sponsors financial literacy classes and talks in the community at churches, schools and nonprofits. Many of these programs are run by Jenny Stasack, SEFCU’s member education coordinator, who talks about the benefits of a relationship with a financial institution, how to take advantage of checking and savings accounts to repair bad credit and the benefits of being able to cash checks for free.
“There’s a real learning curve,” Castellana said. “You overcome the learning curve with positive word of mouth. People have got to be comfortable with the process to utilize products and services. ... For a person with very little exposure to it, they’re walking into an institution very different from their world.”
Keeping tabs on credit
On a recent visit to the City Mission of Schenectady, Stasack fielded questions about finance with patience, tact and humor from an audience comprised mostly of men. They were attentive and engaged. This wasn’t the first time they’d met with Stasack, and they were comfortable with her. One man told her that he recently received a free copy of his credit report.
“It wasn’t as bad as I thought,” he said.
Another man reported a different experience.
“I got my report,” he says. “It was bad, and I threw it away.”
Stasack explained that everyone should get their credit report, even if it’s full of bad news. Only then, she said, can they take steps to improve their credit.
Sometimes, she said, credit reports have errors. She told them about her sister, who went to apply for a home equity loan and was told she didn’t qualify for the good promotional rate. When she took a look at her credit report, she realized it listed four outstanding bills that belonged to another woman with the same name.
“You have to dispute things,” Stasack said. “You have to be on top of things. You want to be able to manipulate the system to make it work for you.”
She stressed the importance of advocating for yourself and how to talk to someone when you know there are problems with your credit report. If someone wants to pull your report, “say, ‘You can pull my report, but there are some things on there from a different time in my life . ... I’ve contacted everyone I owe money. I’m on a payment plan, and I just want you to know I have a plan.’ ”
The men nodded their heads. They agreed that this sounded better then telling someone — a potential employer, a landlord — that they can’t look at their credit report.
“It sounds like you have some ethics,” one man said.
A matter of trust
Stasack said she begins her courses by explaining what
SEFCU is and “why are they being so nice to me. ... They’re waiting for the catch, for the other shoe to drop.”
The people in her courses, she said, have had varied experiences with banks.
“It’s across the map,” she said. “In one workshop, there may be an individual who has had a checking account for years, and in the same class, there may be someone with no checking account. In underserved areas, it’s a mix. A good portion are unbanked but may have been banked in the past.”
Stasack is aware that people with some banking history might be leery of banks due to a bad experience, such as going into insufficient funds, paying fees and ending up with a debt they couldn’t pay off. Often, people don’t even understand why these types of things happen, she said.
Financial literacy courses encourage participants to think about what they need, versus what they want, and track their expenses carefully to see how they’re spending their money. Once they’ve done this, they can begin to make changes.
“We try to help people pull apart where their money is going,” said Sue Siegel, senior vice president of marketing and branch operations for Sunmark Federal Credit Union. “We work on goal setting. What are you trying to do? Do you want to pay rent on time? Do you want to take your family on vacation? Just because someone has a different income level doesn’t mean they have different goals.
“Sometimes, we make financial decisions based on what we’re accustomed to having,” Siegel continued. She pointed to cable television as something many people have but don’t actually need. “You cannot assume, just because you grew up in a household with this, that you need it,” she said.
Learning to save
People who have been through Sunmark’s financial literacy programs learn to make choices. They might decide they don’t need both a landline and a cellphone and drop one of their phones.
Schenectady resident Lynn Dolezsar, 38, began saving money after attending workshops sponsored by the FLAIR Project, which teaches low-income Schenectady families about a number of topics, including health care, goal setting, time management and money management.
“I went in there with an open mind,” said Dolezsar, who lives with her twin sister, 6-year-old son and 15-year-old niece. “I said, ‘Let’s hear what they have to say,’ and I really took it to heart.”
It had been years since Dolezsar had a bank account. But she decided to give it another shot and opened a savings account. In late 2006, she began putting $10 into the account each week; now, there is more than $600 in the account.
“We’re watching our pennies,” she said. “We’re watching how we spend money. Instead of going to Dunkin’ Donuts, I’m putting that money into an account. ... I’m very proud. I feel successful. I’ve got a little nest egg going.
“A little bit of money goes a long way,” said Dolezsar, who makes $8.16 an hour working part-time as a personal care aide for an older adult.
Dolezsar said that she plans to get a checking account eventually. “The checking account will come,” she said. “We want to make sure we keep saving.”
Williams makes $11 an hour at Diamond W. Products in Albany, where he is a welder and powder coater. He put his wife, Donna Williams, through Schenectady County Community College; she is now a substance abuse counselor.
When Williams decided to bank with SEFCU, he was open about his inexperience with banks and willing to ask questions and seek assistance.
“I told them, ‘This is new to me,’ ” he said.
At every turn, he received answers and assurance; today, he knows the tellers by name. He learned how banks worked. A SEFCU employee told him, “Jeff, a bank is insured. Your money will always be here. You can close your account anytime.”
The employee pointed to the opportunity a bank presents.
“He said, ‘Your money will not grow in a piggy bank,’ ” Williams recalled.
He now has several different savings accounts — one account, for instance, sets aside money for a new car — and a checking account and uses a secured credit card.
“I build credit on it,” he said. “It’s better than a debit card.”
Incentive to change
The promise of free money lured Williams to the financial literacy program. Participants opened individual development accounts — matched savings accounts targeted to the working poor. For every dollar they deposited, they received a $2 match, with the amount capped at $300 if the money was used to pay a bill and $150 if it was simply saved. Much of the funding for the financial literacy course came from a grant provided by the Albany Presbytery.
“To be honest, all I was thinking about was the money,” Williams said.
But he began to make changes.
He stopped buying scratch-off lottery tickets. He quit smoking, stopped buying food from the vending machines at work and cut out little trips to Wal-Mart and the Dollar Store.
“There are things you need and things you want,” he said, reciting one of the lessons from the course. “All I know is I’m saving. I don’t have to spend. ... Instead of going to Wal-Mart, I might put $5 or $10 in there.
“I advocate now for this program,” Williams said. “I got a lot out of it. Everything has started falling into place. I can’t say enough about the program. It’s not just what it had to offer me but what it offers the community.”