Your money your goals: A financial empowerment toolkit

June 2020

YOUR MONEY, YOUR GOAL S

A financial empowerment toolkit

Consumer Financial Protection Bureau

Table of contents

Introduction ......................................................................................................................................... 6 About the toolkit .......................................................................................................... 6 The power of financial empowerment....................................................................... 7 Incorporating the toolkit into your work ................................................................... 7 Financial decisions are about more than money ..................................................... 9 Tool: Financial empowerment self-assessment...................................................... 13 Tool: My money picture ............................................................................................. 21

Module 1: Setting Goals .................................................................................................................. 24 Hopes and dreams can be turned into goals ......................................................... 25 Creating effective goals ............................................................................................ 25 Setting goals for life events and large purchases .................................................. 26 Tool: Setting SMART goals........................................................................................ 29 Tool: Putting goals into action .................................................................................. 32 Tool: Planning for life events and large purchases ................................................34 Handout: Revising goals............................................................................................ 36

Module 2: Saving .............................................................................................................................. 38 Reasons to save........................................................................................................... 39 Taking the first step to saving ................................................................................... 41 Making savings automatic......................................................................................... 43

TABLE OF CONTENTS 1

You can save while receiving public benefits ......................................................... 43 Tool: Savings plan....................................................................................................... 45 Tool: Saving and asset limits ..................................................................................... 47 Tool: Finding a place for savings .............................................................................. 50 Handout: Saving at tax time. ..................................................................................... 53 Module 3: Tracking Income and Benefits .................................................................................... 55 Income ......................................................................................................................... 56 Public benefits ............................................................................................................ 58 Getting income and benefits.................................................................................... 58 Protecting the money on your prepaid card .......................................................... 59 Deductions from your pay......................................................................................... 61 Tool: Income and benefits tracker............................................................................ 67 Tool: Choosing how to get paid ............................................................................... 69 Tool: Increasing income and benefits...................................................................... 74 Module 4: Paying Bills...................................................................................................................... 77 Planning for bills ......................................................................................................... 78 Wants versus needs.................................................................................................... 78 Making paying bills easier ......................................................................................... 79 Protecting your information on digital money apps ............................................. 79 Tool: Spending tracker............................................................................................... 82 Tool: Bill calendar ....................................................................................................... 85 Tool: Choosing how to pay bills................................................................................ 87

2 YOUR MONEY, YOUR GOALS TOOLKIT

Tool: Cutting expenses.............................................................................................. 91 Tool: Prioritizing bills .................................................................................................. 94 Module 5: Getting through the Month ......................................................................................... 97 Making a cash flow budget ....................................................................................... 98 Analyzing your cash flow ........................................................................................... 98 Tool: Creating a cash flow budget .........................................................................100 Tool: Improving cash flow........................................................................................103 Tool: Adjusting your cash flow................................................................................108 Module 6: Dealing with Debt ....................................................................................................... 110 Making sense of debt ...............................................................................................111 Co-signers: Agree to repay the loan...................................................................... 113 Types of debt ............................................................................................................ 113 Student loan debt..................................................................................................... 114 Medical debt ............................................................................................................. 116 Payday loans.............................................................................................................. 117 Auto title loans ......................................................................................................... 118 Rent-to-own arrangements ..................................................................................... 119 Avoiding problems with debt ................................................................................ 119 Tool: Debt log ........................................................................................................... 125 Tool: Debt-to-income calculator............................................................................. 128 Tool: Debt action plan ............................................................................................. 131 Tool: Comparing auto loans.................................................................................... 133

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Tool: Repaying student loans.................................................................................. 136 Tool: When debt collectors call .............................................................................. 143 Handout: Avoiding medical debt........................................................................... 150 Module 7: Understanding Credit Reports and Scores ............................................................. 152 Why do credit reports and scores matter? ........................................................... 153 Credit reports ........................................................................................................... 154 Credit scores ............................................................................................................. 165 Using credit ............................................................................................................... 168 Tool: Requesting your free credit reports............................................................. 171 Tool: Reviewing your credit reports....................................................................... 173 Tool: Disputing errors on your credit reports....................................................... 176 Tool: Getting and keeping a good credit history.................................................180 Module 8: Choosing Financial Products and Services ............................................................ 183 Finding and choosing financial products and services.......................................184 Opening a checking or savings account ...............................................................184 Using a prepaid card................................................................................................ 189 Alternatives to prepaid cards.................................................................................. 191 Tool: Finding financial products and services ...................................................... 193 Tool: Comparing financial service providers ........................................................205 Tool: Opening a checking or savings account ..................................................... 213 Tool: Avoiding checking account fees................................................................... 216 Tool: Evaluating your prepaid or payroll card ......................................................220

4 YOUR MONEY, YOUR GOALS TOOLKIT

Handout: Knowing your prepaid card rights........................................................226 Handout: Sending money abroad..........................................................................227 Module 9: Protecting your Money ..............................................................................................229 Ask questions............................................................................................................230 Avoiding scams.........................................................................................................230 You can say no ..........................................................................................................232 Guard your information ...........................................................................................232 Handout: Protecting your identity..........................................................................235 Handout: How to handle identity theft..................................................................237 Handout: Spotting red flags ...................................................................................239 Handout: Submitting a complaint.......................................................................... 241

TABLE OF CONTENTS 5

Introduction

Welcome to the Consumer Financial Protection Bureau's Your Money, Your Goals: A financial empowerment toolkit!

At a glance

This introduction includes two tools to help you start using the Your Money, Your Goals toolkit.

Financial empowerment self-assessment

Use this tool to develop an understanding of your own financial knowledge, skills, and confidence level.

My money picture

Use this tool to help you assess each person's goals and financial situation, so you can determine which specific modules and tools will help them the most.

About the toolkit

This toolkit is designed for anyone who serves people living with low incomes through non-profit, community-based, or private sector organizations or works in a government agency dedicated to helping the public.

Many of the people you meet with may feel overwhelmed by their financial situations, and they often don't know where to go for help. You're in a unique position to provide that help. The people your organization works with already know and trust you. In many cases, they're already sharing financial and other personal information with you as well.

This toolkit gives you the tools and information you need to help people set and achieve goals; build skills in managing money, credit, and debt; and choose financial products that are right for them. Each person has different circumstances and things they can benefit from, so you can select the tools that best meet their needs and just work with those topics.

: INTRODUCTION 6

The power of financial empowerment

You may have heard the term "financial literacy" before. This concept describes the process of helping someone learn about financial topics. While financial empowerment includes the concept of financial literacy, it goes beyond just acquiring knowledge. The main focus of financial empowerment is to build the skills you need to manage money and learn to choose the financial products and services that work for you. When you're financially empowered you're both informed and skilled. You know where to get help with your financial challenges and can access and choose financial products and services that meet your needs. This sense of empowerment builds confidence, helping you effectively use your financial knowledge, skills, and resources to reach your goals. If you feel knowledgeable about financial topics and comfortable in your own approach to money management, credit, debt, and financial products, you can better help others face money issues that may be complicating their lives. The modules of this toolkit teach you about important financial topics and provide tools so you can put this information into practice with the people you help every day.

Incorporating the toolkit into your work

The Your Money, Your Goals toolkit is comprehensive and brings together information, tools, and links to other resources you can use to help people build skills in managing money, credit, debt, and financial products. Having all these resources in one place can make it easier for you to bring financial empowerment concepts into conversations you may already be having. This can help the people you work with increase the financial stability in their lives. Sharing information and tools may feel like a completely different job from your current one-- another thing you're being asked to add to your workload. But once you're familiar with the resources in this toolkit, it can become natural to integrate its contents into the work you do every day.

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