April 30, 2018

The Administration for Native Americans (ANA) is celebrating financial literacy month by offering a glimpse into Native Americans’ capacity, based on knowledge, skills, and access, to manage financial resources effectively and what projects we’re funding to increase it. Our everyday lives are affected by our ability to handle our finances responsibly. Whether you’re budgeting for groceries for the week or saving up for college, you need to be financially literate. Unfortunately, Native American communities have a low financial literacy compared to the national average.

Earlier this month, I was able to visit one of our grantees, New Mexico Community Capital, and learn more about their ANA-funded Native Entrepreneur in Residence (NEIR)project. One of my favorite aspects of this project was the focus on financial literacy education in the classes for participating entrepreneurs. This is a crucial skill set that many in Indian Country struggle with.

First Nations Development Institute (FNDI) published a report in 2017 called Race and Financial Capability in America: Understanding the Native American Experience. The report compiled and added to research on Native American financial literacy and fragility. The main take away was that American Indians and Alaska Natives (AI/AN) are less financially savvy and more financially fragile – lacking the finances to deal with unexpected expenses, than many other groups.

According to one report, 87% of Native American high school seniors received a “failing” score in financial literacy, compared to 62% of all students. The lack of financial guidance from parents and older relatives for AI/AN youth creates a lack of confidence in their ability to manage their money. In order to be financially literate, an individual needs to not only have this basic financial knowledge but the skills and chance to apply this knowledge in decision-making situations. Unfortunately, there are few resources to fill this training gap. Only 29% of AI/AN respondents were exposed to financial education and only 22% had participated in financial education programs.

I know from personal experience that financial literacy and capability are hard to come by. My parents were teenagers when they had me and being young parents, they had a lot to learn in a hurry. Managing finances was a priority for them but, it was also through trial and error. While I was the child that grew and learned with them, my little brother who is 10 years younger than me had a different experience with being financially literate. Though, it turned out alright in the end, there are many financial lessons I wish we had all learned sooner. FNDI’s work proves that my experience is common for Native youth.

In many instances, this means that employed AI/ANs may be earning a paycheck but are not optimizing their income. With paychecks often being barely enough to cover many expenses, it can be hard to figure out the best way to budget. Knowing how money and investments work can help many Native individuals become more financially stable.

That is why grantees, such as Four Bands Community Funds, Inc. in South Dakota, are stepping up to improve financial capability by addressing the severe lack of basic personal financial management skills and experience with the financial marketplace. Residents of the Cheyenne River Sioux Reservation are invited to participate in the project to build capital or credit for starting a business, becoming a homeowner, or purchasing a car. The project will focus on Individual Development Accounts (IDA’s) as pivot points for increasing the likelihood of success for individuals to achieve their financial goals. By combining knowledge and actual experience in opening bank accounts, saving over time, and building creditworthiness, reservation families will gain access to safe and affordable financial products to purchase these large assets.

The second part of the problem is the effect of income level in AI/AN communities. 63% of AI/AN households with less than $50,000 in income are financially fragile. Only 31% of AI/AN households have an income of $50,000 or more. Gender and age also affect financial literacy and fragility with young, female AI/ANs being less financially capable than older males.

Native American Community Services of Erie & Niagara Counties, Inc. (NACS) is another grantee working to counteract these challenges. NACS predominantly works with Urban Indians and notes high rates of under employment and single parent households headed by females. NACS also conducted surveys which showed nearly 30% of respondents having a total income of less than $20,000 and nearly 50% felt financial stability was extremely important. Thus, NACS developed the SEASONS program, which is a 36-month culturally based program to foster self-sufficiency and wellness in the local urban, Native American community, by way of financial education and cultural teachings.