Financial management with low income families

Today I attended a talk on financial management for low income families at the Social Service Training Institute, the training arm of the National Council of Social Service (NCSS). Hats off to NCSS for recognising the need to increase social service professionals'  competency in financial management, in an age where most practitioners typically aim to attend courses on counselling competencies. I admit, when I first became a social worker, I never expected the need to be proficient in financial awareness (of course, I personally did not care much about subjects such as economics, accounting, personal finance, etc during my Uni years). 

Yet during my work with my clients who come with financial concerns (they make up the bulk of most FSC casework), issues in budgeting, financial management and savings come into the fore. As social workers, we are trained to identify the underlying issues behind financial constraints, for e.g. family patterns which where a husband may not want his wife to enter the workforce. However, practical and pragmatic issues remain, where we really need to sit down and properly calculate and predict spending patterns to assist our clients towards breaking the poverty cycle. This is still yet the most challenging aspect of my work. 

This one hour lecture was conducted by Mr Ng Choon Jin, the CEO of the Providend Centre of Financial Education Pte Ltd (more details at www.providend-cfe.com)  

Mr Ng spoke about the need to raise awareness of an individual's financial and retirement goals. Based on a rough estimate that when we retire at 65, we would need 20K per annum for the next 20 years to live a relatively comfortable life. This adds up to $400 000 K when you retire!! Such analogies can be effective in providing us with wake up calls about the need to save, where he quoted that our richness is not dependent on how much we earn, but how much we save. 

2 very simple tools were also discussed: Goal Setting and Budgeting

Goal Setting

 - People need to be motivated towards saving towards a certain goal, be it to achieve $10 K savings in a year, or save $2500 for that driving license to upgrade yourself, goals need to be:

Specific : State how much exactly you want to save by when.

Measurable: You have to be able to measure your progress, and check whether you're on track.

Achievable: Something that is impossible to aim for.

Realistic: You must be able and willing to work towards this goal

Timely: The goal must be set within a time frame, so that the urgency to achieve it is there. 

When a social worker is able to work through these goals with the client,  the action plan towards financial betterment will be more concrete and sustainable. 

Only when the motivation is set, the next tool can come into play

Tool 2: Budgeting That works

The Social Worker/Case Manager would then go through clients' income and expenditure statements to explore ways to increase savings towards financial stability. Actually this is something that is practised within the culture of my organisation. The key idea it to go through client's income and expenditure patterns, and identify ways that savings can be increased: either through increasing income through upgrading of skills, converting to a full time job, extra part time work, etc, or decreasing expenditure on personal wants rather than needs: this includes expenditure on activities in entertainment such as smoking, cable tv, etc. 

My Take

For me the whole process is enlightening even for myself, who at times spends extravagantly rather than save the money for emergencies or towards a certain financial goal. Retirement is currently the last thing on my mind! A change and awareness in mindset would need to happen within, and only then can such practices be encouraged for our clients, who like us may yet need to buy into the idea of financial freedom, a fantasy long dismissed in the face of multiple difficulties. 

As Social Workers, or even anyone else, we cannot give up facilitating the segmenting and sense-making of our clients' multiple issues, and hence we ourselves need to be equipped with practical knowledge in financial management (which will benefit ourselves too!)

One idea I have is to build a kit based on these ideas to facilitate financial awareness for our clients, and cater to linguistic and cultural sensitivities too. But of course that is another project for another time. 

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