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Making money work

Nonprofits established a Financial Empowerment Center to bring financial literacy to Paterson

Gabrielle Saulsbery//January 24, 2022//

Making money work

Nonprofits established a Financial Empowerment Center to bring financial literacy to Paterson

Gabrielle Saulsbery//January 24, 2022//

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“[W]hen you can afford individuals an opportunity to [receive] free one-on-one confidential financial education, that [makes a difference],” said Mayor Andre Sayegh.
One in two U.S. adults face financial barriers to homeownership, according to the National Foundation of Credit Counseling 2019 Road Map to Consumer Financial Health. The NFCC also found that fewer than 1 in 5 adults feel very confident, and over 1 in 4 are not confident at all, that they are saving enough for retirement.

Not knowing how to manage money comes at a high cost. To empower Patersonians with financial literacy, the Cities for Financial Empowerment Fund and United Way of Passaic County together launched the Paterson Financial Empowerment Center in June, the first center of its kind to open in New Jersey.

Since the program’s launch, the Paterson FEC has served over 200 clients by helping them access public support programs, reduce debt, open bank accounts, and increase credit scores.

The FEC came to Paterson after Mayor Andre Sayegh participated in the Bloomberg Harvard City Leadership Initiative, a program that equips mayors and city officials with management tools to tackle their cities’ complex challenges. There, he met Jonathan Mintz, who founded the FEC movement. Sayegh told Mintz he wanted Paterson to have the first one in New Jersey.

“We knew prior to the pandemic that people were struggling with finances. In this once a century crisis, people are probably doing far worse. And it’s not something that people want to be very forthcoming about, financial struggles, so when you can afford individuals an opportunity to [receive] free one-on-one confidential financial education, that [makes a difference],” Sayegh said.

According to the CFE Fund website, the Financial Empowerment Center model has operated for 13 years, and across more than two dozen operational FECs have worked with more than 128,000 clients, helping them reduce debt by more than $183 million and increasing savings by $35 million. Financial counselors work with clients to open and manage bank accounts and to increase their credit scores.

“Quite frankly if your credit score is too low, it’ll be difficult to lease or buy a car, to rent or buy a home. There are so many impediments to progress relative to finances. Some people in Paterson are a flat tire away from financial hardship,” Sayegh said.

Financial illiteracy isn’t just a problem in places like Paterson. It’s a problem across the country.

According to the Global Financial Literacy Excellence Center, only a quarter of millennials demonstrate the ability to understand basic financial concepts, while 63% feel anxious when thinking about their financial situation. PwC reports that 38% of adults say that they don’t have more than $1,000 saved, and the Board of Governors of the Federal Reserve System reports that 12% of adults wouldn’t be able to pay their monthly expenses if they incurred an unexpected bill of $400.

While the Paterson FEC has thus far helped 200 individuals, the effect on the community is far-reaching. Sayegh noted that the FEC is good for the Paterson business community because “people can manage their money more effectively, they have disposable income, and they spend more. Then you’re more inclined to shop at a retail store and maybe splurge at a beauty parlor.

“There’s a multiplier effect – you can spend more on school supplies, grocery shopping, and you don’t have to make every decision more difficult than it should be – you don’t have to debate between buying food and buying medicine,” Sayegh said.

Paterson, Sayegh said, “strives to be a laboratory to improve people’s lives.” The city launched a handful of initiatives this summer to give residents a leg up, including a guaranteed income initiative for 110 randomly selected Patersonians and a driver’s license restoration program.

“We know that people are struggling in our city, that’s why we launched [these initiatives],” Sayegh said. “If you lost your license because you didn’t pay a penalty sometimes it can really set you back. You lose your driver’s license, you lose your life. It’ll serve as an impediment to health care, to child care… .”

Paterson was also selected as a winner in the Global Mayors Challenge on Jan. 18. For that, Bloomberg Philanthropies will give the city $1 million toward its plan to address drug addiction. Paterson will create a hotline and staff it with teledoctors for people to seek help for addiction. The teledoctors will be able to prescribe suboxone, delivered for free, and then connect patients with counselors to continue their treatment.

“Michael Bloomberg,” Sayegh said, “has been very good to Paterson.”

At an event on Jan. 19 outlining the midyear results of the FEC, clients Rosalina Mendieta and Sohier Elhamraary, shared their experience using its services.

“I came to the program with the goal of getting a home for my children,” Mendieta said. “This program has helped me increase my credit, helped me save, and helped me work toward my goals.

“The importance of having one-on-one, face-to-face sessions is you can see the character of the counselor, the way they treat you,” she said.

Mendieta said she plans to keep seeing her FEC counselor to continue working toward her goals, including homeownership.

Sayegh said at the event that he’s “spoken to officials in Newark who are interested in emulating the success” they’ve had in Paterson and told NJBIZ that he believes “there’s an appetite” for it throughout the state.