For a while now, I have been passionate about the need for us all to gain Financial Literacy as early in life as possible. In 2019, I spent a few days on a houseboat with family. On our first night, we got into a very animated conversation about financial literacy that stretched into the wee hours of the morning. I am sure the fact that two of my aunts and one uncle are all economists, and those of us who are not in finance are the offspring of financial folk, was a factor in the amount of time we spent talking about financial literacy. We talked about what it was, how people can gain literacy, and what kind of access people might have to it. To ensure adequate sleep during the rest of the trip, we had to agree to table financial literacy and perhaps talk about what fish was caught or wildlife spotted.
In April 2015 (April is financial literacy month) volunteering through the the New York State Society of CPAs (NYSSCPA), I was invited to be part of a project at the Office of the New York City Comptroller. The group included people from various community nonprofits, someone from the New York Public Library, and a few people who worked in the Comptroller’s Office. We started out with a blank slate and were asked to consider ways to contribute to financial literacy. Having come from different spaces, each of us saw unique challenges in our communities and organizations. As we talked, we came closer and closer to a unified thought. We started by talking about some of the common conversation pieces of financial literacy, like saving, investing, and financial planning. But then questions kept popping up – do we all have access to resources that make it easy to do these things? Some of the people in our group doing community work, talked about how many of their clients do not have bank accounts and may not know how to open one, have reservations about how safe their money might be in a bank account, or might face other barriers (such as language) when seeking to open an account.
I was surprised to learn that a significant percentage of New York City residents are either unbanked or underbanked. In 2017, 11.2% of households had no bank account and another 21.8 were underbanked. That is a third of the city without adequate access to a bank account who have to find alternate methods to navigate our world of money. Being unbanked can be a dangerous proposition – keeping significant amounts of cash in your home can make you a target for theft. Being unbanked can be an expensive proposition – the fees paid to cash pay checks, buy money orders to pay bills, and perform other financial tasks can add up quickly. At the same time often having a bank account with a small balance can attract hefty monthly fees.
A key aspect of financial literacy is access to information. During these meetings, we learnt that, in 1994, New York State enacted a law that required banks to offer lower cost banking services. The accounts, commonly known as Lifeline accounts are to have the following characteristics:
- You can open an account with a deposit of $25
- To keep the account open, you only need to have one penny as a minimum balance
- The financial institution cannot charge you more than $3 a month to maintain your account
- You can make at least 8 withdrawals a month at no charge
- There are no restrictions or penalties regarding deposits. You can make as few or as many as you like.
These accounts existed at many banks (as required) but the banks were not required to advertise them. So many were not included in bank brochures and sometimes employees did not appear to know they existed. So, if we knew that there were banks around New York City that offered these lower cost banking services, how did we get the word out about them and help those who wanted them open an account? We had several meetings and then left the Comptroller’s office staff to work on a way to put our thoughts into a resource. We came back to, at least for me, a very impressive solution. A website called Take It to the Bank, where people could use various criteria to a banking option that worked for them. They could search within their zip code, they could search for a bank that provided language assistance (from Albanian to Yoruba), or they could search for a bank that was open on evenings and weekends. The Comptroller’s office also printed up pamphlets in various languages to be distributed in the City, to raise awareness. Once a person filtered for their criteria, they could print up the bank information and, as the website proclaimed, take it to the bank.
In June 2015, the website was up and good to go. From a discussion, a group of us from diverse spaces, considered our goals and purpose and tried to think out the challenges. First of all, New York City residents had a website that they could filter through based on their particular needs and desires. Community nonprofits could sit with those they serve, discuss needs and help their clients find a bank. The information could be printed up and presented to the bank. With the information in the printout, the bank staff could assist the client open a bank account. I was impressed and proud about my small contribution.
Literacy is often about what one has access to. When I was a kid, it was an exciting day when my mother took me to open my first savings account. The lessons that my parents shared with me about things like saving were lessons someone else had taught them. Financial literacy is not something that we are born with and it is not something that is magically granted to us when we become adults. The ability for all of us to manage our financial resources depends on the knowledge we can get access to. Every little bit counts and, with this resource, New Yorkers will know more about how to take their resources to the bank. It’s kinda cool!