Far too many Rhode Islanders face challenges that might have been avoided through a greater understanding of personal finance. As a state, we must come together to ensure the stability of our families by protecting them from risky financial products and enabling them to build assets and save for their future.
Financial empowerment occurs when a person receives financial education and uses this knowledge to make informed decisions. All of us can enjoy the resulting benefits. Whether you are trying to balance a budget and make ends meet, save for your child’s education, or plan for retirement, there will be important decisions affecting your ability to achieve these goals.
Since coming into office, I’ve made it a top priority to find innovative ways to help Rhode Islanders better manage their finances and achieve financial empowerment. As treasurer, I serve as the state’s chief banker, and I am in a unique position to collaborate with banks, credit unions and community organizations to move our state forward.
To date, our efforts in this area have included launching an online financial literacy program for high school students, which is operating in over 40 schools across the state. I also joined the payday reform coalition to eliminate this predatory practice in Rhode Island. We are still fighting for this much-needed and long-overdue reform.
Recently, Treasury launched its newest initiative, the Financial Coaching Corps, as part of the broader Empower RI program. The Financial Coaching Corps is a partnership with the Capital Good Fund, a microfinance non-profit that fights poverty through innovative microloans and personal financial coaching.
The Financial Coaching Corps is flexible by design, so everyone benefits. It breaks down into two key parts. The first pairs trained volunteers (active and retired bankers, accountants and financial planners) with Rhode Island residents interested in sitting down one-on-one to create a budget, learn how to improve their credit score, or build a debt management plan. The second is an employer-based model where trained fellows deliver financial coaching at the workplace as an employee benefit.
In both cases, participants will learn useful and practical ways to improve their financial standing. We need this in Rhode Island. Two-thirds of our residents say they have difficulty covering expenses and paying bills. We have the fifth highest average credit card debt in the country. Between 2008 and 2011, the payday industry in our state doubled in size, reaching $70 million in annual trading volume last year.
Rhode Island also suffers from the second highest unemployment rate in the country while median annual household income fell 18 percent between 2006 and 2011. The effect is that Rhode Island households have become susceptible to economic stress. To make matters worse, certain financial service companies engaging in predatory practices have, in recent years, created more and more ways to fall into debt. Technology has made spending and borrowing easier than ever and, as a result, there has never been a greater need to take action to educate consumers and provide guidance on the best way to achieve their financial goals.
I believe that financial empowerment can play a role in our economic recovery. Rather than paying penalties and late fees, families can spend in the local economy. More students will attend college and graduate with less debt. Our seniors will enjoy a dignified retirement. Small business will create and retain jobs. Families will keep their homes. By individually improving our financial well-being, we can improve our state’s economy one person at a time.
To help drive this effort, please visit www.treaury.ri.gov and click Empower RI to get involved.
Submitted by Rhode Island General Treasurer Gina M. Raimondo (November 20, 2012)