Note: This site is for reviewing legacy plan of work data from 2007-2011. If you are looking for the current plan of work interface, visit pow.nmsu.edu.

Financial Security for All - Personal Finance

Plan Goal

Improve the financial literacy of New Mexico Citizens through better money management, increased savings, and wise use of credit.

Situation Statement

Financial security is important to individuals, families and communities. Financial literacy is important for all income levels. It is especially critical for limited resource families. The fewer the resources the less room to make financial errors or deal with emergencies such as medical, dental, loss of job or death of a wage earner. The household assets of communities are an indicator of a region’s economic stability and prosperity.

The 2007 per capita income in New Mexico was $31,474 which ranks 43th in the nation. Of the 1.9 million people in New Mexico, 17.9% of them live below the poverty level compared to 13.0% nationally. Although the 8.4% (seasonally adjusted) unemployment rate in New Mexico for May 2010 is lower than the 9.7% nationwide, New Mexico is the state with the highest percentage of working families at poverty level of 41%. New Mexico also ranks among the worst five states in the US for low-income working families with parent without health insurance (50%, 2nd), children in low-income working families (46%, 1st), adults with no high school degree or GED (17.1%, 4th), and jobs in occupation below poverty (36.6%, 3rd) categories.

The low per capita income is related to low education attainment. About 18.5% of adults age 25 or older in New Mexico do not have high school degree or its equivalent. This figure is even larger for Hispanic and Native Americans in the state, at 40%. It is estimated that at least 20% adults in New Mexico are illiterate while half of adults in New Mexico are functionally illiterate, which refers to the inability to adequately deal with simple daily demands. Given the complex nature of personal finance, the proportion of functionally financial illiterate in New Mexico is expected to be more than 50%. The area of personal finance itself covers a wide array of fields such as budgeting, savings, spending, investments, retirement planning, credit, mortgage, financing, frauds, scams, and taxes.

Residential real estate is the biggest holding of wealth for most households. Credit problems and lack of savings can make it difficult for families to become home-owners. The home-ownership rate for New Mexico families in 2010 (first quarter) was 69.5% which is comparable to the national average at 67.1. But the recent economic downturn is likely to put homeowners into difficulty in maintaining their house, physically and financially.

Many of our young adults do not know how to manage their finances and many college students graduate with a high debt load due to student loans and overuse of credit cards. The average debt for a family with one or more credit cards is over $8,000.

The issue of predatory lending in New Mexico illustrates the likely effect of not being able to comprehend fine details of loans and interest rates. Gallup and Grants have two of the highest predatory lending store concentration in the nation at 880 and 881 residents per licensee, respectively. The two cities and Farmington together have six times greater concentration of predatory lending stores compared to other places in the state. A similarity of these three cities is that they are located outside of Native Americans reservation.

Aspects of financial planning which are often neglected are financial preparation for rainy days which includes those for health and natural disasters. New Mexico ranks second in percentage of residents without health insurance at 22.7% being uninsured. Lack of health insurance, which includes being underinsured, will surely hit hard on people's financial well-being and the quality of health care. Recent natural disasters have accentuated the need for preparation for emergencies, in this case, floods or fires. Preparation includes an evacuation plan and emergency supplies. There also is a need to have legal financial papers organized and available in the event of evacuation to assist individuals and families to cope and recover in a timelier manner.

Target Audience and Actions

The Financial Security for All Program will address the household economic challenges by providing the targeted audience – extension agents, New Mexico residents, government officials, community bank personnel, teachers, and community leaders - with direct education programs, trainings, up-to-date information, resource networks, and research-based knowledge tailored to the audience‘s socioeconomic and demographic backgrounds in order to motivate people to seek knowledge in financial and other household resources, nurture a healthy financial habit, promote efficient use of resources, keep consumers informed about consumer issues, and supply information on organizations for further assistance. The main programs that will be offered include High School Personal Finance Program®, CreditSmart®, Money Talk, Dollar Decision$®, and America Saves at the state and county level.

Short-Term Objectives

1. Over 50% of youths who participate in youth a personal finance program (e.g. High School Financial Planning Program) reported an increase in overall knowledge in budgeting, savings, credit card use, and other credit-related issues.
2. Among youths who participate in a youth personal finance program, 40% of teens will increase knowledge about credit card costs.
3. Among youths who participate in a youth personal finance program, 40% of teens will plan to start saving
4. Following a personal finance course for college underclassmen, 70% of students who took the course will improve their comprehension on basic budgeting skills, debt management, and credit cards.
5. Following a personal finance course for college upperclassmen, 50% of students who took the course will improve their comprehension on home and car financing, life insurance, investment, and retirement planning.
6. After the completion of personal finance program for adults, 70% of participants will have improved understanding on basic personal finance issues such as budgeting, savings, retirement planning, and credit card use.
7. After the completion of personal finance program for adults, 70% of participants will recognize the importance of personal records, a valid will, durable power of attorney and other estate planning documents as a result of the legal education program.

Activities:
• Discuss extension works, challenges, and issues in New Mexico with other Extension Specialists and county agents who are active in the personal finance area by December 2009.
• Develop professional relationships with county agents, other extension specialists, and local officials
• Attend twenty university, regional, state, and national trainings, conferences, and meetings by February 2010.
• Contact personal finance and family resource management extension specialist or the like in neighboring states and western U.S. region by December 2009.
• In three months, build a website that contains personal information, education background, job experience, and short-term projects.
• Visit 75% of all county offices by Summer 2010 in order to better understand the needs and challenges of different counties.
• Conduct an online needs evaluation survey to home economics county agents not only to measure the Financial Security for All (FSA) program needs but also to test their basic financial knowledge.
• Respond to ad hoc requests of extension agents and other community stakeholders.
• Publish a website on FSA-related issues to increase marketability, lay out consumer-related issues, and provide resources for expert referrals.
• Figure out the needs of New Mexico residents, county agents, and educators in order to design appropriate Financial Security for All programs.

Medium-Term Objectives

1. Among adults who participated in a personal finance program but had not requested for a credit report in the last 12 months, 50% of participants will have obtained their credit reports after one month.
2. Among adults who participated in a personal finance program, 40 % of participants will have made one financial change after three months which includes opening a bank account, diversify investment plan, discarding unnecessary credit cards, paying off debt on consistent basis, and/or consulting a debt counselor.
3. Three months after completing a personal finance program, over half of youth participants will employ at least one new healthy financial habit which includes opening a savings account, consistent savings plan, making a budget, reducing spending on wants, and/or paying off debts.
4. Three months after completing a personal finance program, over half of students who took a personal finance course will take on new at least one healthy financial habit which includes making a budgeting skills, having debt elimination plan, opening a savings account, developing reading habit on personal finance matters, and reducing unnecessary spending.
5. Six months after completing personal finance program for adults, 50% of participants reported will employ healthy personal finance habits such as budgeting, savings, retirement planning, and credit card use.
6. Six months after completing personal finance program for adults, 50% of participants have a valid will, durable power of attorney and other estate planning documents as a result of the legal education program.

Activities:
• Enrich website’s contents by having more information on projects and resources, including more attractive web tools, and making it easier to find.
• Design an attractive website while incorporating Google analytics®, by-the-minute relevant news via twitter®, news feedback via blog, relevant links on consumerism, and search tags.
• Participate in at least three competitive grant applications in the by December 2011.
• Build a more elaborate website that includes programs offered with referral contact information by December 2010 with at least once a biweekly update.
• Launch two one-credit-hour courses to college students on the basics of financial independence in college and the financial preparation for after-college life by Fall 2010.
• To update all the out-of-date extension publications and translate all family resource management publications to Spanish by 2012.

Long-Term Objectives

1. Among home economics county agents (or their representatives) who participated in home economist’s financial education program, 75% of these agents will understand the basics of personal finance such as budgeting, credit cards, debt payments, home purchasing, savings, and investments.
2. Family resource management extension specialist will conduct projects or lead a grant writing group at least once a year.
3. Among those who participated in personal finance program, 30% of participants will have increased savings after two years.
4. Among those who participated in personal finance program, 20% will have employed a solid retirement planning in the process after three years.

Activities:
• Establish a bimonthly one-hour meeting and training program to educate county agents on finance-related issues and exchange ideas.
• Share findings and expertise with state legislature to curb fraudulent and predatory lending practices.
• Continuous involvement in grant opportunity search and writing while focusing on two to three specific areas for expertise.

Evaluation Plan

1. Employ a pre/post test on participants to measure knowledge gained and attitude change right after educational programs.
2. Utilize a questionnaire to gauge financial well-being health program increments and improvements.
3. Use questionnaire to measure actual behavior change and the impact of programs.
4. Keep track of the number of programs and participants conducted by county agents, teachers, and other trainers.
5. Adopt qualitative methods to extract needs, performance, and satisfaction from trainers, county agents, and participants.