Financial education for families
In her role as a University of Minnesota Extension Educator with the Family Resiliency Team, Sharon Powell spends a lot of time teaching low-income individuals and families how to build money-management skills and improve their financial situations. She also helps families at all income levels improve their relationships, particularly parents and children.
The position is perfect for Powell, who earned a master's degree in human development counseling from Vanderbilt University and a Ph.D. in family social science from the U, because she gets to be both an academic researcher and outreach educator. And through her work, she continually sees people using newly acquired information and skills to make positive changes in their lives.
This is especially evident when Powell teaches classes about finances, which she does at several sites in north Minneapolis, including the University’s Robert J. Jones Urban Research and Outreach-Engagement Center (UROC). Taught in-person or online, the classes are designed for audiences who are primarily low-income with many participants either being immigrants or refugees or experiencing some kind of transition, such as divorce or job loss. Whatever people’s circumstances might be, Powell focuses on getting people up to speed on important financial concepts, such as how the credit system works for and against consumers.
“Whether you’re American or not, our credit system can be confusing,” she says, “but it’s so important that people understand things like what it means to have good credit and how to improve your credit score.” Fortunately, Powell explains, strategies for achieving and maintaining good credit are easier than people think.
Making one small purchase a month on a credit card and paying it off promptly is a great way to build better credit safely without incurring interest or going into debt. “I also tell people to be sure to check their credit reports,” Powell says, “because about 25 percent of the time, those reports include mistakes and you have to be the one to point them out and ask credit bureaus to remove them.”
Also vital is the need to know how much buying something on credit will cost over time. Powell makes the latter painfully clear by using amortization tables to show exactly how much of a minimum payment on a loan or credit card goes toward interest and principle over time. “Those tables really help people see why it’s important to put more toward the principal if they can, and why they should always try to get the lowest interest rate possible,” she explains.
Class after class, Powell sees people go from discouraged to hopeful when they realize they do have some power to improve their financial lives. “And I’m glad because I like to think I can provide some hope,” she says. “People often come to classes feeling defensive because in the U.S., we are prone to finger wagging about being short on money, as if it is a character flaw. I can tell you that most of the families I work with are good money managers. They’re just stretched for money because there isn’t enough money. That’s the problem.”
Tips on making credit cards work for you
- Always pay your bill on time to maintain good credit and avoid late fees, as well as penalty interest rates that could be applied to your account.
- Keep track of what you are spending so that you always stay below your credit limit. Going over your limit may result in credit card companies charging additional fees and/or increasing your interest rate.
- Pay more than the minimum amount when possible to reduce the amount of interest you will pay over time. Better still, pay your balance in full each month to avoid paying interest.
- To build and/or repair credit, consider getting a secured credit card where you deposit a certain amount that becomes your credit line. For example, you deposit $500 and then can charge up to $500.
- Compare fees, charges, interest rates and benefits before choosing a credit card. Some cards might look like a great deal, but the terms and conditions may reveal that they are not.