The good, the not so good, and the place for financial coaching

ACFCU works with many people who spend a high percentage
of income on necessities as our membership is primarily in Tennessee.

Low unemployment rates and rising wage levels across America sound great, and thank goodness for them. Other data out there, though, make clear the importance of financial coaching and other tools that can help families use their income more strategically. That importance is magnified in Tennessee and Kentucky, both of which are among the 13 states where renters spend more than 50 percent of their income on necessities.

Take this piece by GOBankingRates’ Cameron Huddleston. The Life and Money columnist reports on GOBankingRates’ study of the Consumer Price Index and of housing cost data. Rents are up 7.6 percent in three years, and other necessities have risen by 14 percent.

GOBankingRates surveyed 5,000 renters about monthly expenses, defining necessities as rent, groceries, transportation, utilities and health care. After figuring how much of median household income those expenses accounted for in each state, they used the “50-30-20” budgeting rule to determine what percentage of folks in each state can’t afford the cost of living. That budgeting rule figures 50 percent of income for necessities, 30 for nonessential costs and 20 percent toward saving.

Tennesseans’ average monthly cost for necessities totals 60 percent of median income – third highest behind Delaware and New Mexico. And with Northeast Tennessee median incomes lower than the state average, the folks Appalachian Community Federal CreditUnion (ACFCU) and its partners serve fight even more of an uphill battle to balance their budgets.

Financial coaching has helped Kayla Cabe improve
her financial health tremendously.

That’s why at ACFCU we continue to feel very fortunate to work with people like Kayla Cabe, an aspiring nurse who wants to carve out a good life for her sons Adarius, 8, and Kamari, 1. Cabe learned about ACFCU’s financial coaching resources during an ACFCU workshop at Adarius’s after-school program.

In less than a year working with Financial Coaching Specialist Adam Taylor, Cabe’s credit score has increased by more than 100 points. She’s paid off predatory debt and delinquent school debt and is poised to start LPN school next year. “I want to eventually have my bachelor’s in nursing but I’m taking it step by step because I have two kids,” Cabe said.

Through the process, Cabe’s income hasn’t fluctuated much – she’s learned to make the most of it. She’s gained financial knowledge and “learned to wait on things.”

So long as the cost of living remains problematic for many Americans, there can’t be enough partners out there working together to help families use the resources they have more knowledgeably and strategically. And as Cabe said, many don’t realize they can benefit.

“I think people think they know, and that ‘there’s nothing they can tell me that I don’t know.’ I kind of felt that way at first.”

Now Cabe is saving $100 a month in a sinking fund and another $80 a month for school fees “and a house eventually.” She’s bucking the trend GoBankingRates found in their study. Despite a modest income, the fact Cabe has any savings puts her ahead of a third of Americans.

“I think you guys really want to help people be successful,” Cabe said of ACFCU. She’s right.

 (Jeff Keeling is director of community relations for Appalachian Community Federal Credit Union.)