Providing A Path To A Better Safety Net For LMI Residents Following COVID-19
By Chelsea DeCicco, Executive Vice President of Universal Initiatives
The Coronavirus Pandemic was an unprecedented moment in our global history – plunging our community and communities throughout the world into a public health crisis and economic recession by closing down businesses and driving individuals of all incomes into unemployment and financial unpredictability. COVID-19 revealed some of the most pressing longstanding challenges in our public systems which were designed to provide limited public benefits and minimize the voices of the people most impacted. During lockdown, social media became the safety net for rightfully frustrated citizens to voice their pain and frustration with an inefficient and inconsistent system – the current inability to rapidly provide appropriate aid to those in dire need brings attention to the importance of building long term safety nets for residents in our community most at risk of suffering from financial exclusion and loss during the progression and aftermath of a global pandemic.
LMI households in our community recognize the importance of saving and want to save, however, they are not always in the position to do so nor equipped with the right tools, support, and education in order to follow a traditional savings model that is consistently growing as they age. In many scenarios, LMI households in our community are saving, but throughout the course of the year tap into those savings to address sudden or urgent needs, such as tire replacements or health bills. The act of saving money is not the struggle of modern day consumers, but the process of holding, sustaining, and being able to build without having to tap into long-term savings is the problem we are seeing in our communities.
So the question now is: How can we address the need for sustainable saving and how can we provide LMI residents with a path to a better safety net following the COVID-19 pandemic?
By providing mandatory financial education or accessible financial education programs in our community for LMI residents throughout many stages in their lifetime, we are able to assist and mentor individuals from an early age through to adulthood, where financial behavior at a young age becomes the precedent for their mid-life financial habits. The goal of our financial education initiative at UI is to provide LMI residents with access to quality financial education so they can tap into long term wealth and build healthy financial habits that build consistency in savings behavior within LMI households so they have an ability to earn more and save more over time. With a focus on our mission, we strive to connect residents with goals, both big or small, as an indicator and motivator to continue positive saving behavior and fund goals that have a short-term satisfying result, while being able to contribute to long-term savings gradually, so LMI residents don’t feel the need to tap into long-term savings to weather a financial shock and can avoid expensive forms of debt by saving for the predictable future (ex: like saving towards new tires or a new car).