THE BLOG

Consumer Empowerment 101: Financial Guidance Gives Families a More Stable Future

04/05/2010 05:12 am ET | Updated May 25, 2011

It sounds simple -- a more informed consumer is likely to make better decisions at the time of purchase. While many agree that financial literacy may build awareness, it is unlikely, by itself, to help someone better navigate the fine print. Often, the information misses the key questions confronting a consumer at the time of a big financial decision. A pamphlet about balancing the checkbook, for example, does not equip a homebuyer with the know-how to avoid scams or identify loopholes in his contract.

Financial planning, on the other hand, caters to a family's unique personal finance goals. Those with the means to do so wisely seek out professional advice on how to stretch their dollar and secure their retirement. The same approach has been shown to work for low- and moderate-income families. However, planners are out of reach for many average Americans. In some communities, nonprofit financial counselors are stepping up to help their neighbors open bank accounts, make sound homebuying decisions, or identify an affordable credit card. Especially in today's economic climate, families need relevant, real-time advice from professionals who offer objective guidance on a range of financial issues.

Thanks to Representative Luis Gutierrez (D-IL) -- who sponsored the "Financial Counseling Language" amendment to the "Wall Street Reform and Consumer Protection Act of 2009" -- the nation is one step closer to increasing the availability of financial counseling through local nonprofits without a big hit to the budget. These efforts contribute to the promotion of highly effective services, such as those offered by The Resurrection Project (TRP) in Chicago, Illinois. TRP's free one-on-one financial counseling program helps families establish short- and long-term goals. They have had great success with more than 100 participants, many of whom did not have a credit score and earn an average wage of $10.40 an hour. Since entering the program, approximately 60% of them have opened bank accounts, 30% have lowered debt, and 16% have begun a credit history for the first time.