November 14, 2005|Jennifer Delson | Times Staff Writer
In a small Orange County classroom last week, students were learning how to calculate percentages, tabulate interest and budget their money. But this was no ordinary classroom.
The Spanish-speaking students in Santa Ana were mostly working-class parents, trying to get a better handle on managing their money. And to do that, they’ve landed back in school.
For The Record
Los Angeles Times Saturday November 26, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 38 words Type of Material: Correction
Financial course — An article in the Nov. 14 California section gave the wrong title of a financial literacy course run by Operation HOPE of Los Angeles. It is “Banking on Our Future,” not “Banking on Your Future.”
“I’m trying to learn how to control my finances and understand the interest rates,” said housewife Margarita Victorin. “What I’m seeing is that if you plan things out, you can use credit cards and never pay any interest.”
Free financial literacy classes have become increasingly prevalent throughout Southern California, where new immigrants often avoid commercial banks, sometimes patronize check-cashing businesses with high fees and frequently borrow at high interest rates.
“These days, every nonprofit, every bank seems to offer financial literacy classes,” said Anne Stuhldreher, a research fellow with the New America Foundation, a Sacramento policy institute that studies wealth and savings. “The need is great.”
Statistics reveal major gaps among immigrants in their use of financial institutions and their understanding of basic finance. Studies show that 28% of Californians do not use banks, and that percentage is far greater among immigrants.
Sergio Bendixen, a public opinion researcher who co-wrote a 2001 study of Latino immigrants in Miami and Los Angeles, said the education efforts could reverse a troubling trend. He estimates that 60% of Latino immigrants do not have bank accounts and only 23% own homes.
His survey showed that 55% of respondents did not have credit cards.
Efforts to boost financial literacy are underway nationwide, but nowhere are they more obvious than in Southern California, where classes are offered daily. Major banking chains, including Bank of America, Union Bank of California and Wells Fargo, support such efforts with instructors and free food for students.
Bank of America gives money to nonprofit groups such as Operation Hope in Los Angeles to conduct “Banking on Your Future” seminars at local schools. Citing banking industry studies, BofA spokesman Michael Chee also estimated that 60% of Latinos in California do not have bank accounts.
In Santa Ana, the class last week was part of Wells Fargo’s efforts. It was held at Willard Intermediate School near downtown and is repeated about 20 times during the school year. It draws as many as 30 parents per session, official said.
The 90-minute class last week was run by Luis Cachua, Wells Fargo director of financial literacy. He delivered his presentation in Spanish to eight mothers.
He encouraged them to get bank accounts and shop with lists to avoid buying what they did not need. He told them how to handle credit card debt, and he explained how a good credit rating can save them money because high scorers get better rates. He told them to beware of product placement in stores designed to encourage impulse buying.
And he warned them of the dangers of payday loan outlets, which he says can charge high interest rates. These outlets “will give you a pen and a piece of gum and they will speak to you in Spanish so you feel comfortable. But they will charge you an outrageous fee,” he said.
Check-cashing and payday-loan services disagree, saying that they meet a pressing need. Immigrants often have trouble cashing checks or borrowing at banks, they said.
The financial message for immigrants resonates throughout Southern California, whether it is offered in Thai at the Thai Community Development Center in Hollywood or in Korean at the Korean Youth and Community Center in Koreatown.
In Westminster, Little Saigon Radio, KVNR-AM (1480), offers a financial literacy show called “Money Smart Radio Talk Show.” Every Wednesday from 7 to 7:30 p.m. Hieu T. Nguyen, president of First Vietnamese American Bank in Westminster, gives a 15-minute talk, then answers questions.
Many of the questions are as simple as how the federal government insures bank accounts, but they also cover credit scores and credit cards, Nguyen said. “The questions are often very simple, but the answers are very important for the community.”
Organizations are incorporating financial literacy into all aspects of immigrant life. A Santa Ana nonprofit organization, for instance, built a demonstration bank-teller window into the Kidworks Donahue Community Center, which opened last month.
English classes at the adult education center of Santa Ana College include field trips to banks. Wells Fargo Bank in Pacoima conducts classes over potluck dinners or sandwiches at midday.
Public schools have long taught aspects of financial literacy, but community classes have become increasingly popular since 2000, said Nan Mead, spokeswoman for the Endowment for Financial Education, a Colorado nonprofit group.
Wells Fargo began offering more financial classes two years ago, said bank spokesman Armando de la Libertad. More than 6,400 people have taken the Wells Fargo classes in Orange County since 2004, said spokeswoman Julie Green Rommel. Before then, only a few hundred took the class each year.
Other organizations have seen similar increases. In 2000, the United Way of Orange County began sponsoring classes because its representatives saw an growing need in communities that depend on check-cashing operations and liquor stores to get cash from their earnings. United Way’s classes will draw up to 1,000 people this year, officials say, about three times the number that attended classes three years ago.
“You would think most people would know this stuff. They don’t know what a resource a bank can be. They don’t know how to navigate through the system,” said Donna Syes-Ponepinto, United Way senior vice president.
In communities like Santa Ana, where 53% of the population is foreign-born and 77% speak Spanish, city officials believe financial literacy isn’t just about personal improvement, but about community development.
Maria Yanez, economic development specialist for the Federal Empowerment Zone in Santa Ana, which receives federal incentives to encourage business in a large part of the city, said the office had conducted five three-day financial literacy classes in the last year.
“Helping [the students] has an overall impact on the rest of the community,” she said. If residents save their money, they can help businesses grow and neighborhoods improve, she said.
Students in these classes say they are a must. Maria del Rocio Hernandez, 43, said she had run up a $3,000 debt on her Target credit card since she was laid off from a warehouse job. She attended the recent Wells Fargo class.
“What I’m getting here is the advice I need to avoid credit card debt in the future,” she said. “It’s advice I need to get ahead and help my children.”
