National Perspective on Financial Literacy & Asset Development for People in Mental Health Recovery

Judith A. Cook, PhD Professor & Director

University of Illinois at Chicago, Department of Psychiatry

Presented at NYAPRS 7th Annual Executive Seminar on Systems Transformation April 27, 2011, Albany, NY

A Word of Thanks to our Funders

• U.S. Department of Education, National Institute on Disability & Rehabilitation Research

• Substance Abuse & Mental Health Services Administration, Center for Mental Health Services

People in mental health recovery need to be on the road to economic security

Financial LiteracyFinancial Literacy

Financial literacy is the ability to understandmoney and how to manage one’s own

personal finances through financial planning.

Low-Income People in Low-Income People in Recovery May Feel Financial Recovery May Feel Financial

Planning is FutilePlanning is Futile “ “I just sat down the other day and I just sat down the other day and

wrote out checks with which to pay my wrote out checks with which to pay my bills and find out I’ve already spent my bills and find out I’ve already spent my money before I even have it. There money before I even have it. There was no fat to trim, nothing to budget.”was no fat to trim, nothing to budget.”Woman in ChicagoWoman in Chicago

A Fatalistic View Can Get in the A Fatalistic View Can Get in the Way of PlanningWay of Planning

““I think when I have money, ‘You I think when I have money, ‘You know what? I may not be here know what? I may not be here tomorrow. Look at my friend who tomorrow. Look at my friend who passed away suddenly.’ Then I passed away suddenly.’ Then I don’t care about the end of the don’t care about the end of the month.”month.”

Man from Man from GeorgiaGeorgia

UIC Financial Education CurriculumUIC Financial Education Curriculum• Lesson 1: What’s Important to YouLesson 1: What’s Important to You?? values, needs vs values, needs vs

wants; identifying financial goals, budgetingwants; identifying financial goals, budgeting• Lesson 2: Income vs. ExpensesLesson 2: Income vs. Expenses difference between difference between

fixed vs. flexible expenses; developing a savings planfixed vs. flexible expenses; developing a savings plan• Lesson 3: Managing Your DebtLesson 3: Managing Your Debt controlling debt, how to controlling debt, how to

increase your income, 101 ways to save $increase your income, 101 ways to save $• Lesson 4: Understanding CreditLesson 4: Understanding Credit understanding your understanding your

credit report; managing credit/debt problemscredit report; managing credit/debt problems• Lesson 5: Using Financial InstitutionsLesson 5: Using Financial Institutions checking & checking &

savings accounts, direct deposit, debit cards, using savings accounts, direct deposit, debit cards, using ATMs, online banking, bank loansATMs, online banking, bank loans

• Lesson 6: Building Consumer SkillsLesson 6: Building Consumer Skills smart shopping, smart shopping, spending traps, spotting fraud, consumer rights spending traps, spotting fraud, consumer rights

Financial Education Course Evaluation: Pre-Post Test Results

Statistically significant increases (p<.10 by 2-tailed significance on paired-t-test) were observed on:How often do I... • Write down my financial goals. • Write out a spending plan that includes savings for

goals and emergencies.• Use coupons.• Keep track of my spending.

On a scale from 1=not comfortable to 5=very comfortable...• What is your comfort level with your knowledge of

financial terms and concepts? • What is your comfort level with applying what you

learned?

• “I am so aware now [about] what I am buying or what I am choosing not to buy. I use to go on sprees, now I am choosing not to waste money or overspend. I make mistakes sometimes but now I track expenses all the time. I am also more aware of credit card debt.”

• “This course was a mirror and I’ve now begun to pay more attention to my spending.”

• “I am saving in an envelope for vacation. And earned money by selling two things I don’t use.”

• “I am now more motivated to address my debt, I’m working on agreements to pay off debt and I have a better understanding of my financial situation.”

In Students’ Own Words…

You are like everyone else…You are like everyone else…

Asset AccumulationAsset Accumulation

Asset Accumulation has Documented Psychological

Benefits

• enhanced personal efficacy • greater personal control• feelings of empowerment• future orientation

Assets as Important as Income to Enhancing Quality of Life

• Panel Study of Income Dynamics (Yadama and Sherraden, 1996) used simultaneous equation modeling

• Found that assets had a positive effect on • expectations and confidence about the future• making specific plans with regard to work and family• more prudent and protective personal behaviors• more social connectedness with relatives, neighbors

and organizations• Effects of assets in this analysis were found to be

equal to those of income in their association with positive outcomes

Individual Development Account - IDA• Established by Assets for Independence Act• Run by U.S. Health & Human Services Office

of Community Services under the Administration for Children & Families.

• Save earned income for purchase of 1st home, small business capitalization, or post-secondary education

• Participants must earn less than 200% of poverty level ($21,780/yr for family of 1)

• Savings must be from earnings• Locked box accounts - emergency access

only• SSI/SSDI & TANF recipients are eligible

Person Deposits

$20

Federal GovernmentMatches $20

Local Bank or PhilanthropicOrganization Matches $20

Person NowHas $60

IDAs - MATCHED Savings Accounts

$20 + $20 + $20 = $60

IDA Programs – Savers with Psychiatric Disabilities

http://www.cmhsrp.uic.edu/download/NRTC4.IDA%20Project%20Report.10.25.10.pdf

New Hampshire• Two programs: Dollars & Sense Credit Union

Demonstration Project; Volunteer Income Tax Assistance & Financial Education Study

• State universities coordinated the programs as part of research studies: U of NH; Southern NH University

• 4 savers with psychiatric disabilities in each program

• 3:1 match (Dollars & Sense), 4:1 match (VITA)• New Hampshire Community Loan Fund provided

the match• Banks: Northeast Credit Union (Dollars &

Sense), Citizens Bank (VITA)• 1 saver matched (Dollars & Sense) for a micro-

enterprise, 2 matched (VITA) for post-secondary education & a micro-enterprise

New Jersey • Collaborative Support Programs of New

Jersey• Based at a peer-run self-help center• 41 savers in MH recovery• 4:1 match for advanced education & micro-

enterprise development; 2½:1 for home ownership

• Local match from state MH authority & Wachovia Bank

• Commerce Bank held IDA accounts• Outcomes: 19 savers matched, 3 homes, 9

degrees, & 7 micro-enterprises

Louisiana

• Mental Health America of LA IDA Program• Based at a national mental health advocacy

organization’s state affiliate• 10 savers• 2:1 match• Local match from State Office of Mental Health• Chase Bank• 9 savers matched, 1 micro-enterprise, 9 home

repair purchases

Alaska

• Cook Tribal Inlet Council IDAProgram

• Based at a social service agency for Alaska natives (in their Employment & Training Services Department)

• 246 participants (savers with MH/SA disabilities & their family members)

• 5:1 match• Local match from the Alaska Mental Health Trust

Authority• Wells Fargo Bank• 107 savers matched, 53 home purchases, 44 post-

secondary education, 10 micro-enterprises

Illinois

• UIC/Thresholds IDA Program• Run by a state university research center

& based at a community mental health center’s supported employment program• 5 savers• 2:1 match• Local match from the Rebecca Susan Buffett

Foundation• Charter One Bank of Chicago• 3 savers matched, 1 micro-enterprise, 2 post-

secondary education

California

• CA Individual Self-Sufficiency Planning Project

• Not IDAs but Independence Accounts through the SSA waiver program – people could save up to $8,000/year without penalty

• 8 savers with psychiatric disabilities who were SSI beneficiaries

• No match• Local banks held accounts• Matching not possible, savers purchased post-

secondary education, moving expenses, transportation, vacations

Summary of Lessons Learned by Programs

• Savers in MH recovery can save & match successfully

• Many savers need ongoing social & emotional support, with peer support essential

• Need for employment services to deal with job loss & work issues

• Lack of affordable housing stock was a barrier• Multiple life issues impacted savers’ ability to match• SSA disability benefits issues remained problematic• Multiple collaborative relationships require

administrative time & funding

Array of Services to Support Successful Saving

• Employment Support• Ongoing Social & Emotional Support• Clinical Services• Financial Literacy Education• Asset-Specific Education• Benefits Planning Assistance

Which is the best approach?

• Should we be mainstreaming people with disabilities into existing IDA programs?or

• Should we be creating IDA programs that are tailored to the needs and circumstances of individuals with disabilities? (AFI, 2009)

Essential Administrative Partnerships1. MH service delivery or advocacy organization,

peer-run program, or nonprofit organization with MH expertise that serves as the program "home"

2. Program administrator funded directly by AFI to operate IDAs & draw down federal match

3. Bank or other financial institution that holds the IDA savings accounts

4. State or local government or tribal authority, community development fund, or philanthropic organization that provides local matching funds

5. Local organizations that promote financial literacy, offer asset-specific education & help, & provide financial services & supports

Thank You!

UIC National Research & Training Center on Psychiatric Disability

http://www.cmhsrp.uic.edu/nrtc/default.aspFinancial Education Curriculumhttp://www.cmhsrp.uic.edu/nrtc/financial-education.aspReport on IDA Programshttp://www.cmhsrp.uic.edu/download/NRTC4.IDA%20Project%20Report.10.25.10.pdf