United Way Provides Financial Literacy in Erie County

Today, many families in Erie County live from paycheck to paycheck. When these families experience an unforeseen financial hurdle they often turn to quick loans or use credit cards with high interest rates as a solution. For the majority of these borrowers this leads to further financial problems and traps them into high-cost debt.

Knowing how to manage money is a critical skill many low-income adults and youth lack today. Educational or cultural barriers discourage many individuals and families from taking positive action to manage their finances.

United Way of Erie County is working to help individuals and families obtain financial education through local programs geared toward saving, credit management, home ownership and retirement planning. United Way of Erie County is working to bring together financial institutions, business partners, non-profits and community agencies to provide education and assistance to the unbanked and financially challenged.

 

Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) is a federal income tax credit available to individuals and families participating in the workforce. Eligibility for the EITC is based on income level, marital status and number of dependent children. In 2004, 21 million individuals received the EITC, returning $39 billion in income to workers.

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Building Savings at Tax Time:
Split Refunds

Beginning in 2007 the Internal Revenue Service (IRS) instituted a new procedure to allow taxfilers to deposit their refund into as many as three bank accounts, enabling them to use tax time to build savings. Tax payers simply designate the accounts and the portion of their tax refund that they want in each account by completing IRS Form 8888.

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Family Savings Account (FSAs)

Family Savings Accounts are special matched savings accounts designed to help hard-working families and individuals establish a pattern of regular savings and, ultimately, purchase a productive asset. The Family Savings Account Program is open to any Pennsylvania Resident whose family income is at or below 200% of the poverty level.

The result of the program is that individuals set short and long term savings goals and develop life-long saving habits. To participate in the program an individual must establish a savings goal, participate in four Financial Literacy Classes and save at least $10 per week. The Literacy Classes are designed to help participants acquire the personal and financial skills essential for long-term success and build skills such as long-range planning, household budgeting and credit repair.

Savings goals can include purchasing a home, repairing a home, starting a business, and secondary education for themselves or their children.

Participants in the Family Savings Account Program earn a $1 for $1 match and can contribute up to $2,000 during a one to three year period. Also, the savings match can only be used for the agreed upon savings goal.

Resources:

  • GECAC Phone: (814) 459-4581


Check cashing fees can range from 1.6% of the value of the check to as much as 10% of the check's value.

 


In February, Congress passed the Economic Stimulus Act of 2008, which calls for the Treasury to deliver cash payments to 130 million American taxpayers. The bill has been signed by the President.

IRS and FMS, two bureaus within the Treasury Department, will play key roles in processing and delivering payments. The first checks will be delivered in early May.

Taxpayers should be alert for tax rebate scams such as telephone calls or emails claiming to be from the IRS and asking for sensitive financial information. The IRS will not call or email taxpayers about these payments nor will it ask for financial information. Scam emails and information about scam calls should be forwarded to phishing@irs.gov.

Further information on the economic stimulus package is available on www.irs.gov.

Financial Education

Financial education provides information and skills that enable individuals and families to manage their financial resources wisely, create positive relationships with financial institutions and make informed decisions regarding their personal finances.

United Way of Erie County and the Erie Community Foundation are partnering in their first-ever jointly funded project. “Money Works For You” has the following goals:

  1. Increase the financial literacy of low-income working families.
  2. Increase the number of low-income working families who have a banking relationship.
  3. Improve the financial condition of low-income working families.
  4. Improve the knowledge-base and skill level of agency staff who work with low-income working families.

Grants were announced in the fall of 2007 to qualified local agencies who will administer this innovative program. Please click here to read the press release for details.

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Accessing Local Financial Institutions

Mainstream financial institutions include banks and credit unions that provide products and services including checking and savings accounts, check cashing, loans, mortgages, credit cards, direct debit and access to ATMs. Connecting the unbanked with mainstream financial institutions can significantly reduce their expenditures on financial services. Individuals and families that do not have access to mainstream financial institutions often pay more for basic financial services including check cashing, short-term loans, tax preparations services and money transfers.

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©2006 United Way of Erie County