Last week, I attended the virtual 2021 AFCPE (Association for Financial Counseling and Planning Education) Symposium for financial educators, planners, counselors, coaches, researchers, and content creators worldwide.

Below are seven of my key take-aways about personal finance content and tips for professional practice:

Justice-Involved Populations

Studies have found an association between incarceration and reduced financial well-being. Ex-offenders are twice as likely as others to use check cashers, payday loans, and pawnshop loans and 35% earn less than $25,000 annually.

Two of the biggest banking issues that this population deals with are lack of a valid ID to open a bank account and mismanagement of previous bank accounts. People going to jail were advised to freeze their credit to deter identity theft and to have a trusted power of attorney to sign documents on their behalf.

Over-Shopping Trends

Pre-COVID, about 6% to 10% of Americans were considered over-shoppers. The pandemic added a “perfect storm” of boredom, “rehearsed lives” on social media leading to FOMO (fear of missing out), and increased online purchasing. Consequences include debt, destroyed relationships, wasted time, and diminished social lives.

When people over-shop, there is an emotional reason behind it.

They may be motivated to change when they see the annual cost of “small” purchases and when they identify healthy alternatives to shopping (e.g., physical activity). The widely studied six-question Richmond Compulsive Buying Scale is a useful self-assessment tool.

Financial Psychology

Outcomes in life are a result of money behaviors. “Money Scripts” are messages about the use of money that are handed down from others. People also experience “Financial Flashpoints,” which are major events in their lives that leave a big impression. Examples include growing up poor and a scarcity mindset, growing up wealthy, and divorce.

Financial behaviors often make perfect sense when someone understands the money scripts that drive them. A tip to increase savings is to name your savings accounts for a specific purpose.

Tax Concerns

A networking discussion about income taxes included concern that some people who received the advance child tax credit (ACTC) will owe taxes in April 2022 and, in some cases, ACTC payments went to the “wrong” parent in divorced couples that alternate tax credits.

Other issues raised were short-term capital gains/losses for day traders, new reporting requirements for cryptocurrency brokers, and the fact that the penalty for not filing an income tax return is 10 times higher than the penalty for not paying taxes owed. The IRS has payment programs for delinquent filers.

Financial Infidelity 

Financial infidelity is deceptions about money in close relationships such as a spouse/partner or parent/child. “Red flags” include hiding savings accounts, hiding debt, hiding purchases in the trunk of a car until a spouse leaves the house, and “me” and “mine” language in financial counseling sessions.

An increasing trend, especially among young adults, is for couples to agree on who pays for what but not share money in joint accounts. Couples need to develop a money management process that works for both individuals.

Retirement Planning

In another networking discussion, concerns of older adults included health care costs, inflation, long-term care, keeping busy, and outliving savings. On the other side of the age spectrum, some older Gen Zers (age 9-24 in 2021) express “climate doom” concerns. It is hard to motivate them to save when they do not see themselves (or the planet) being around in 50 years.

Concerns about the long-term future of Social Security are also common. The best way to start planning for retirement is to start where you are with what you have.

Savings Behavior

Small steps, such as saving $100 per month or 4% of each paycheck, add up over time. A study by Saver Life, a program for people with low and moderate incomes, found that even $100 of savings can have a huge impact: greater likelihood of financial satisfaction, less high-cost borrowing, and better ability to keep utilities on.

COVID-19 stimulus payments not only provided immediate relief to millions of American families, but they also helped many create a savings buffer against future emergencies.

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