5. Building Financial Capability

Helping FSS Participants Build Assets
and Financial Capability

MODULE 5.1: Asset-Building and Financial Capability

Helping Participants Build Assets and Financial Capability

In this module you will learn:

What Are Assets? What Is Financial Capability? Why Do They Matter?

Assets are savings and possessions of value (e.g., car, house, stocks and bonds).

Why assets matter:

FSS © 2017 | U.S. Department of Housing and Urban Development

This video clip describes how asset-building can help shape the mindset of FSS participants and support achievement of their goals.

Financial Capability is the know-how and resources to make good financial decisions. The following are important building blocks of financial capability:

Together, financial capability and asset-building through increased earnings can help FSS participants achieve long-term goals.

Financial capability skills include how to make and stick to a budget, avoid and reduce debt, and save to meet short- and long-term goals. These can skills help FSS participants:

Accumulating assets built through increasing earnings from employment can help FSS participants achieve such goals as homeownership, starting a small business, obtaining post-secondary education, and buying a car. Most of these assets – for example, post-secondary education and a car –can in turn help FSS participants obtain higher-paying jobs, contributing to higher incomes.

Growing financial capability helps low-income participants avoid costly financial pitfalls that maintain a cycle of debt and poverty.

When participants have healthy credit and access to safe, affordable banking products, they can avoid expensive and risky ways of accessing money and credit (e.g., non-bank check-cashing and payday loans).

Financial health and capability are closely related to other areas of personal, professional, and financial opportunity. For example, landlords often check credit reports and scores before leasing an apartment, and employers often check these when evaluating a job applicant for employment.

This video discusses the importance of helping FSS participants improve their credit scores.

What Are the Benefits of Including a Strong Focus on Asset-Building and Financial Capability in the FSS Program?

The escrow account ensures that asset-building is built in to all FSS programs, as the account can be used to support interim goals and/or grow into a substantial asset for successful FSS graduates. But as described later in this module, there are many other steps that FSS coordinators can take to help FSS participants build assets and financial capability.

Here are some of the reasons why it’s important to focus on helping FSS participants build assets and financial capability:

As described in the video, helping a resident to improve his or her credit score can lead to an “early win” that can help FSS participants build and maintain motivation to achieve their long-term goals.

How Can FSS Programs Help Participants Increase Their Financial Capability?

A focus on asset-building and financial capability can be beneficial at each stage of the FSS program. For example:

  Download Sample Financial Practices and Well-Being Questionnaire

A participant’s ultimate plans for the use of the escrow funds should not be included as an Individual Training and Services Plan (ITSP) goal since participants need to achieve all of their goals in order to graduate and access their escrowed funds.

In the video clip, an FSS practitioner describes why she asks FSS participants to identify specific plans for how they will use their escrow accounts. These plans are not binding, but help to increase motivation for participants to achieve their goals.

More information on many of these topics is provided later in this Module.

Referrals to Financial Capability Services Providers

While some FSS programs provide financial capability services – such as financial education, financial coaching, budgeting, and credit counseling – directly to participants, most FSS program coordinators use service referrals as a primary means of helping participants build financial capability. For example, depending on participant needs and available partners, FSS coordinators may refer participants for financial education and budgeting support, credit or debt counseling, homeownership counseling, and to partners who can provide a free or low-cost checking or savings account.

In this video clip, an FSS practitioner describes the experiences of some of her FSS participants in working with a consumer credit counselor.

In addition to non-profit asset-building organizations and credit counselors, financial institutions – including credit unions and private, for-profit banks – can also be good partners. Among other services, financial institutions can provide low- or no-cost checking to FSS participants, affordable home mortgages, and financial education workshops. Some will be local organizations, while others will be regional or even national -- for example, a local or regional branch of a national bank.

In this video a nonprofit agency describes how they partner with credit unions and banks to provide access to affordable financial services to families in the FSS program.

This table, distilled from Administering an Effective Family Self-Sufficiency Program: A Guidebook Based on Evidence and Promising Practices, describes a broad range of organizations that can provide services to help FSS participants build financial capability:

  View Financial Capability Service Providers


Here are a few national resources for finding local partner agencies:

Incorporating Asset-Building Into Case Management and Coaching

In addition to making referrals to organizations that help residents build financial capability, FSS coordinators can incorporate financial coaching into case management or coaching that the FSS coordinator already provides. The simplest way to do so is to talk with participants about their financial concerns, resources, practices, and goals during the periodic check-ins FSS coordinators hold with participants. Incorporating these questions into regular check-ins allows FSS coordinators to note whether participants’ financial health or financial practices have progressed or changed.

Direct Financial Coaching

Some FSS programs may wish to integrate financial coaching more explicitly into the case management or coaching they provide. Under this model, the FSS coordinator might provide one or more of the following services:

This approach can help participants make stronger and faster progress toward building financial capability and organize their financial lives to form and maintain a habit of saving.

Successful financial coaching within an FSS program often follows a client-centered coaching model (more on a client-centered approach in Chapter 3). The coordinator assesses the participant’s needs and priorities, works with the participant to help establish goals based on the participant’s priorities, and helps the participant identify interim steps toward those goals. FSS coordinators may provide some of the service to help the participant progress.

Compass Working Capital, a nonprofit asset-building organization based in Boston, integrates financial coaching into the FSS programs it manages.

This video describes their overall approach to incorporating financial education and financial coaching into the FSS program.

Financial Coaching Activities

The following are some of the main activities included as part of financial coaching for FSS participants. As noted above, these can be provided through referrals to outside service providers or integrated into the case management or coaching provided directly by the FSS coordinator (click the arrows to expand the content):

Financial Capability Training and Resources for FSS Staff

Most FSS coordinators do not have a background in financial education, financial coaching, or credit counseling, so FSS programs interested in providing more direct financial counseling services will need training and other resources for staff members.

Where in-person training is not an option, resources that are available freely online may be helpful. A few examples:

Your Money, Your Goals is a toolkit provided by the Consumer Financial Protection Bureau (CFPB) to assist social service staff in discussing financial health and practices with participants, and provide financial coaching or education, and credit counseling activities. The toolkit is modular (i.e., service coordinators can incorporate any or all topics from the toolkit).

Building Financial Capability: A Planning Guide for Integrated Services is an interactive guide to help community-based organizations interested in integrating financial capability services into existing programs (e.g. housing, job training, or Head Start), created by the HHS-funded Assets for Independence initiative. There is a video training series companion to the guide.

Assessment tools from the Center for Financial Services Innovation include Measuring Financial Health: 8 Key Indicators, a 1-hour webinar geared to help organizations measure client financial health.

The Change Machine is an online financial coaching platform with self-paced lessons covering a six-part framework for financial security, including tools, tips, and coaching strategies tailored for coaches working with specific financially vulnerable populations.

Financial Capability Training and Resources for FSS Participants

Virtual Goal Coach is an online tool containing links to resources that can help families achieve their employment, financial, education and homeownership goals.

PowerPay provides tools to families to develop a personalized, self-directed debt elimination plan.

Vertex42 provides free budget templates, financial calculators and other debt reduction and money management tools. This NerdWallet article reviews additional budgeting and savings tools – many for free – designed to help consumers save more and spend less.

Please complete this quiz before you proceed to the next module. To take the quiz, use the arrow keys or click the correct answer choice. If you answer incorrectly, you will be able to try again until you select the correct response.
Scores will not be recorded.

1. What is “financial capability”?

A - Financial knowledge (sometimes called “financial literacy”).Partially correct.Financial literacy is an important part of financial capability, but is not sufficient without the skills and behaviors to make good use of that knowledge and access to the opportunities and resources (e.g., access to a low-cost checking account) needed to increase financial health.B - Financial skills and behaviors (e.g., budgeting, saving, checking and correcting credit report, safe use of credit and other financial products).Partially correct.Financial skills and behaviors are an important part of financial capability, but require financial knowledge to grow and maintain these skills and financial opportunities and resources (e.g., access to a low-cost checking account) needed to increase financial health.C - Access to financial opportunities and resources necessary to meet financial goals (e.g., access to free or low-cost checking, access to low-cost credit).Partially correct.Access to financial opportunities and resources is an important piece of financial capability – but families need financial knowledge to know what to do with these resources to improve financial health and need to develop financial skills and behaviors to carry through on what they know.D - All of the above.Correct!Financial knowledge helps families know what actions they want to take to improve their financial lives and meet their goals. Families also need financial skills and behaviors (e.g., a habit of making a budget and sticking to it) and the necessary financial opportunities and resources (e.g., a low-cost checking account) to successfully carry out and maintain their financial plans, increase their financial health, and work toward their goals.

2. What are two ways that FSS programs can help participants increase their financial capability?

A - Include the participants’ ultimate self-sufficiency goal or goal for the escrow account (e.g., become a homeowner) as an ITSP goal to encourage progress. Make referrals to partners who can help improve financial capability services (e.g., credit counselors).Incorrect.Never include goals that may be beyond the participants’ control to achieve or which aren’t necessarily achievable within the period of the FSS program as ITSP goals. For example, instead of “become a homeowner” or “save enough escrow for a down payment,” include a necessarily achievable interim step such as “attend session with a credit counselor.” Coordinators should, however, make appropriate referrals to financial capability service providers to help participants reach their goals.B - Include a discussion of the participants’ personal and financial goals, barriers, and level of financial capability in the initial assessment and goal-setting.  Make referrals to partners who can help improve financial capability services (e.g., credit counselors).Correct!Including discussion of a participant’s goals, barriers, and level of financial capability and resources in the initial assessment and goal-setting can help motivate the participant and guide referrals or coaching. Making referrals to partners to provide financial capability services can help the participant improve financial health and move toward ultimate goals.

3. True or False: In addition to non-profit community-based organizations and government partners, many FSS programs have begun to partner with banks or credit unions to provide financial counseling and safe financial products for FSS participants.

A - True.Correct!While not all financial institutions are interested in partnering with PHAs and owners to provide services or products, many do. Some banks may want to partner in order to meet their Community Reinvestment Act requirements or improve their relationship with the community. In some cases, a bank or credit union may even be willing to match funds that participants deposit in accounts (for a limited number of accounts/participants) through programs such as Individual Development Accounts.B - False.Incorrect.While the most common financial capability partners are nonprofit organizations and not all financial institutions are interested in partnering with PHAs and owners to provide services or products, many do.  Some banks may want to partner in order to meet their Community Reinvestment Act requirements or improve their relationship with the community. In some cases, a bank or credit union may even be willing to match funds that participants deposit in accounts (for a limited number of accounts/participants) through programs such as Individual Development Accounts.

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