With Financial Capability Month coming to a close, now is the perfect time for city leaders to strengthen the financial capability of their residents by informing them about the non-predatory financial products and services currently available.
Financial Tools for Youth
As we previously noted, the first time youth earn their own income is the perfect time to educate them on savings, credit, and their options when it comes to financial services. Check out our most recent Municipal Action Guide for more information on improving the financial capability of youth.
Local financial institutions like community banks or credit unions can not only open up savings and checking accounts for youth, they can provide financial education services as well. The District of Columbia’s Bank On DC program provides examples of how cities can coordinate these efforts with success.
Free Tax Preparation Services
Even though the tax deadline was April 18th this year, that doesn’t mean the end of the line for your low- and moderate-income residents when it comes to the Earned Income Tax Credit, or EITC. Residents in some communities who may not have filed by the deadline can still file a tax return. The EITC is a refundable tax-credit that can be claimed going back as much as three years. Cities should consider the rewards of encouraging residents to seek help and to take advantage of FREE Volunteer Income Tax Assistance (VITA) locations; many of these VITA sites also provide other valuable services that can further improve outcomes for your residents.
Click here to read about how the city of Gaithersburg, Maryland, is helping to get the word out and connect their residents to additional services.
A New Retirement Savings Option
Most people know how important it is to save for retirement, but many haven’t found an easy way to get started. In fact, millions of Americans are unprepared for retirement. Lack of access to a workplace savings plan isn’t the only barrier to saving: high fees, complicated investment options, and fear of losing money can also stall the process of developing financial literacy.
To help address the retirement savings crisis in America and make it easy for people to start saving, the U.S. Department of the Treasury developed myRA®. This new retirement savings account has no opening or maintenance fees, and carries no risk of losing money. It was designed for people who don’t have access to retirement savings plans through work and are looking for a simple, safe, and affordable way to start saving for the future. Small businesses that do not offer retirement benefits to their employees can promote myRA as an alternative method of saving for retirement.
Opening a myRA account online is simple, and contributions can be made to myRA accounts from paychecks via direct deposit or from individual bank accounts. People can continue saving through myRA even when they change jobs, so they never skip a beat in their saving plans.
Individuals can even contribute to myRA accounts from their federal tax refunds, and may also qualify for the Saver’s Tax Credit, which can lower their tax bill or increase their refund. Because myRA contributions are after-tax, if an emergency arises, they can also withdraw their contributions (minus interest) without penalty. Visit myRA.gov for more information and to download free materials.
City Financial Empowerment Programs
From Garden City, Michigan, to Dubuque, Iowa, cities are taking varying approaches to empowering their residents through collaborations & partnerships. Want more examples? Check out a recent report we issued that provides a national overview of city financial inclusion efforts.
Finally, we have a number of additional resources on our website on how to improve financial literacy in your city. Click here for more information.
About the Author: Anthony Santiago is a Senior Fellow focusing on Partnership & Program Development in NLC’s Institute for Youth, Education, and Families. He can be reached at firstname.lastname@example.org.