building a savings culture in texas: dreams can come true

Presented by Larry Garcia

2011 Raise Texas SummitFederal Reserve Bank of Dallas

Nov 1, 2011, Dallas, TXBuilding a Savings Culture in TEXAS:

Dreams Can Come TrueEl Paso Affordable Housing CUSO, 6801 Viscount Blvd, El Paso, TX 79925

epaffordablehousing@sbcglobal.net phone 915-838-9608 fax 915-838-8085

SURVEY Chose Questions that would:

• Determine Savings Behaviors before the Financial Education Workshop

• Determine if Financial Education Workshop addresses Savings Behaviors

• Determine after 6 months if Savings Behaviors were positively affected by the Financial Education Workshop

Conducted in workshops held from April 1, 2011 through Sept. 30, 2011—received approximately 400 surveys for this analysis.

• Lack of knowledge regarding the mechanisms and techniques for healthy saving

• Perception that resources are insufficient for savings to be plausible

• Fear of/distrust for financial institutions

Results of the pre-survey represent a spectrum of savings behavior among participants: while some report healthy practices and attitudes with respect to saving, others are skeptical or uninformed of the process. Of those who do not save and/or do not use formal financial institutions, there seems to predominate a:

These observations are demonstrated in the following…

Percentage of participants that put money aside as savings:

Don't put money aside

Put money aside

29.17

70.83

For those that don’t put money aside, what are the major reasons they do not?

72%

15%

9%5%

Not enough moneyLack of knowledgeLack of self controlOther

For those that do put money aside, how do they decide the amount to save?

27%

62%

8% 3%

Have a set amount that they always put aside

Put aside what is left over after expenses

Save spontaneously (short term goals)

Other

Frequency with which participants save money for a certain reason, but end up using it for something else:

23%

37%

31%

9%

Often Sometimes RarelyNever

70%

30%

Had such an expense

Did not have such an expense

Months in the past year that participants had an unexpected expense over $200:

Which of the following were factors in this situation?

Loss

or damage

to physi

cal p

roperty

Medical o

r dental e

xpenses

Emergency

repairs on yo

ur vehicle

Something e

lse0

102030405060

11.7%

40.82%

56%

26.04%

Which places did participants most use to save money during the last year?

Savin

gs Acco

unt

Checking A

ccount

Somewhere at

home

401(k) or 4

03(b)

With an

other indivi

dual

Stocks

Savin

gs bonds

IDA

Some plac

e else05

10152025303540

Prevalence of checking accounts:

13%

87%

Do not have checking account

Have checking account

For those that don’t have checking accounts, why don’t they?

Believe they don't need a checking

account38%

Don't think that they would qualify

16%

Fear/distrust of in-stitutions

12%

Lack of knowledge12%

Request rejected/legal15%

Other reason7%

To Review

Three principle barriers to saving, as indicated in the pre-survey, are:

1. A lack of knowledge regarding the mechanisms and techniques for healthy saving

2. The perception that resources are insufficient for savings to be plausible

3. A fear of/distrust for financial institutions

A lack of knowledge regarding the mechanisms and techniques for healthy saving

Five Step Financial Plan1. Establish Goals2. Analyze Information3. Create a Plan4. Implement Plan5. Follow the Plan and Modify

Appropriately

The perception that resources are insufficient for savings to be plausible

Needs VS. Wants

Establish Goals

A fear of/distrust for financial institutions

Selecting a Financial Institution

• Previous negative experience with financial institution

• No experience by parents with financial institutions• Feel “out of place” in financial institution

At present, there have not been sufficient post-surveys completed to determine the

effectiveness of the Financial Education and Home Ownership Clinic.

This said, we predict with confidence that the Clinic will result successful in addressing the

barriers to saving that have been discussed in this presentation.

Demographics:

Approximately 400 surveys

Size of household:

Language most spoken at home:

Gender of participant:

Average age of participant: 38.2

Is participant Hispanic or Latino