Financial literacy for the marginalised - Daniel Ross - Nov 8, 2013

Knowing how to manage your personal finances is tough for anyone, even those who consider themselves experts. For someone who has never learned the basics of money management or is struggling with wider life issues, however, the world of credit, interest rates, fees and due dates can seem daunting. But there are a number of resources that can help.

According to an ANZ report into adult financial literacy in Australia, the groups with the lowest financial literacy include people more likely to be living on the margins of society: those with no post-secondary education, relatively low levels of income and women in general.

Maisie Warburton, coordinator of the financial literacy education program at Wesley Mission in Sydney, says people who have never been taught good habits are especially vulnerable to falling into a spiral of debt from which it's extremely difficult to extricate themselves.

"If you're educated about money, you know your basic rights," says Warburton. "But many haven't had that sort of education. They don't have the knowledge to ask the right questions. If a payment is due, they don't know to call for an extension on the payment."

Hardships hamper learning
Warburton has run the financial literacy program at the Wesley Mission in Sydney for two years -- a program she designed herself for those who exist on the fringes of mainstream society.

"We cater to single mothers, the unemployed, gambling addicts, solo parents, people coming out of the prison system, victims of domestic abuse, immigrants -- basically, individuals who are isolated from the rest of the community," says Warburton.

Program participants are varied, each bringing with them a different story of adversity. For many recent immigrants to Australia, language is problematic, "particularly when you're dealing with the more technical small print associated with some of these financial products," Warburton says.

"When it comes to women who have just come out of abusive relationships, it can be very stressful for them, learning about money. And you've got to factor in that they've gone from living in their own home to living in a government-assisted house. There's the whole psychology surrounding domestic violence, and some want to return to their old abusive relationships purely to get their old life back," Warburton says.

Aside from the stress of having to learn from scratch the basics of money management, Warburton says many people who go through the program carry shame or embarrassment about their situation.

In a letter to the Wesley Mission, Les Banton, a former alcohol, drug and gambling addict, wrote about the emotional fallout from his former life. "The hardest part about coming clean about my gambling addiction was recognising all the shame and guilt I was carrying about my past," Banton wrote.

Easy prey for high-interest schemes
Warburton says it's easy for people to fall into a perpetual cycle of debt. Australians desperate for cash can fall foul of short-term lenders, for instance, who offer loans at exorbitant rates of interest.

Warburton is also wary of certain "buy now, pay later" deals, where you can buy a product immediately and pay for it interest-free within a specified period. "What you see are women who are starting anew and going and buying household items like a TV. They go into the deal with every intention of paying for it before the deal ends, but that rarely happens. And what they don't realize is that once the deal is over, the interest rate on that product is always extremely high," says Warburton.

Financial literacy programs can help
There are a number of resources for Australians who want to learn about money management. The Wesley Mission program covers core principles and is accessible to the masses, Warburton says. "We've geared it to someone with a year 10 level of education. It's very basic -- how much money are you making and how much money are you spending?"

Christine Bahari, a financial literacy counsellor at Lifeline Financial Counselling Service in Western Sydney, also uses easy-to-understand methods to illustrate the points she wants to make to clients.

"I educate them through brochures, diagrams and making references to concepts that they do understand, then relating them back to their particular financial issues," says Bahari. "Also showing them, arithmetically, where they stand."

Aside from the free financial counseling services that are available throughout the country, Bahari recommends that people try a variety of different avenues for help.

"In the case of migrants, I often provide referrals to ... community centres who assist with English classes and food vouchers," Bahari says.

Other sources include:

Government welfare agencies that help with job searching
Lawyers that work at nonprofit firms, such as legal aid
General counsellors for those who are depressed or have low self-worth.

Hope amid frustration
Bahari admits that her task can sometimes seem fruitless. "It is not easy to get them to understand, so quite often as a financial counselor, you have to just accept that the client does not fully understand."

Nevertheless, educators have the potential to turn around the lives of those they help. "What's so good about this course is that you can provide hope," Warburton says. "You can say to these people that they don't need to be in this situation forever. It never fails to amaze me the stories you hear and the determination they have to turn their lives around."