How can I save when I don’t have money?

27 January 2017
Author: Trisha Islam
How can I save when I don’t have money? This is a question we often hear in our financial coaching work, and for good reason. For many individuals and families living on low incomes, managing day-to-day expenses can be a struggle, with little money left over to set aside for emergencies. Financial emergencies— situations where expenses spike for different reasons can often happen for financially vulnerable Canadians preventing them from building up savings for larger emergencies or future necessities.
 
While participants of the MPower Money Coaching Program may have started the program with this outlook, they soon found that working towards a savings goal of any amount, was actually attainable and helped to boost their confidence and improve their money management skills. The MPower Money Coaching Program was a pilot project developed by Prosper Canada and delivered through three City of Toronto employment centres. The program helped participating individuals on social assistance and/or seeking employment to identify and work towards a financial goal(s). Participants were supported by volunteer professional financial planners trained to provide financial coaching to people living on low incomes. Coaches met with their participants at least once a month for a period of five months.

Saving a small amount over time helps individuals establish a saving habit
 
Financial coaches provided guidance, encouragement and support to participants to participants to help them set and prioritize financial goals and develop action steps to achieve them. For example, Mariam wanted to create some savings so that she could go back to school. Her coach encouraged her to start saving right away. “He [the financial coach] said, ‘you need to save. You can start with a small amount and from that you can reach your goal for an emergency.’ By the second week, I started saving a small amount.” Together, Mariam and her coach set short term and long term goals, so that eventually she could go back to school. “Before, I would always say yes, I’m going to save tomorrow. If I didn’t take this program, I would never save for the future, I would never budget on my own. I would start, but I would buy a dress from my savings.”
 
Building a small amount of savings over time also helped some participants to make purchases that seemed out of reach before. “I couldn’t have bought my coffee table when the time was right to buy it on sale”, said Anne who was motivated to start a savings plan. “So now I’m looking at a new dining room set that I couldn’t have gotten last year. I wasn’t in that place, and [now] I still have savings.” 
 
By the time the program wrapped up in August 2016, some participants had made steady progress toward their goals. Anne described how she was able to put money towards her savings. “In a very short time, I had $400 saved, which has never happened before.” She noted that being aware of her spending and working towards a savings goal contributed to this accomplishment. “It’s a confident feeling, when you achieve something you’ve wanted to do.” 

Having a good saving habit builds an individual's confidence to make good financial decisions
 
Many program participants felt their confidence and skill level had increased as they tracked towards their savings goals throughout the program. “It helped me to focus more than anything. I had been putting it off for years,” Anne said. Mariam talked about how spending less on what was not important, helped her feel able to face small emergencies. “I am more prepared because of the saving that I am doing… for emergencies.” Realizing how important this lesson was, Mariam proudly shared it with other members of her family. “When I started this program, I recommended it to my cousin. What I learned, I would teach her. She is very happy. She thanks me and remembers me for helping her save money.”
 
Stories from program participants remind us that savings can protect us from unexpected hardships as well as enable spending, even on a limited income. Working towards a savings goal can help build the confidence and skills necessary to make healthy financial decisions. 

In addition to supporting participants to build savings, the MPower Money Coaching program provided support for participants to:
  • Set a financial goal or goals
  • Develop a financial action plan
  • Access help to file their taxes if they need it
  • Build a personal/household budget
  • Reduce their debt
  • Improve their credit score.
The pilot program has ended, however Prosper Canada believes strongly in the financial coaching model and is exploring ways to build this and other proven financial empowerment solutions into our public, community and financial services so we can help more Canadians to prosper. 
 
A report including findings from the program will be released shortly. Visit www.prospercanada.org/coaching to learn more about the MPower Money Coaching program and our other financial coaching programs.

Note: Names have been changed to protect participants' identities.

THE AUTHOR

Trisha Islam is a Program Officer at Prosper Canada. Her current work involves designing and implementing programs around financial coaching, tax filing and accessing benefits with partners from across the country. She has an Honours Bachelor of Arts degree in International Development from McGill University and a Master of Science in Comparative Social Policy from the University of Oxford.

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