TONIGHT at 8:30 PM - Mesilah: Supporting Families to Achieve Financial Balance

By Mesila of Baltimore

Posted on 03/01/12 | Comments (0)

Join Mesila tonight, Monday, Feb. 20th, at Bnai Jacob Shaarei Zion, at 8:30 p.m. Click here for further information. Come and gain some hashkafic views as well as some practical starting points for the budgeting process.

Financial challenges are not new to the Torah-observant family. Many in the community are supporting a larger-than-average family, in addition to carrying the extra expenses of tuition and kosher food. All these factors contribute to the financial challenge. The short-term impact of the recession as well as the longer-term social and economic trends have increased the intensity of the challenge and affected many local families. Mesila in Baltimore is a volunteer organization that helps families achieve financial stability. Josh Hurewitz, a business consultant who serves as coordinator of Mesila, answers the following frequently asked questions:

Q: What is Mesila’s mission?

A: Mesila’s mission is to educate and support financial literacy in the community. In order to manage financially, individuals and families need to be financially literate and to make choices that produce a financially balanced life. Unfortunately, many individuals and families have not been formally or informally educated about finances, and many struggle, because they have not learned the skills, tools, and behaviors required to effectively manage their finances.

Q: Practically, what does Mesila do to accomplish its mission?

A: Mesila takes a two-pronged approach. One is prevention: We hold seminars in schools and other community settings that raise the awareness and emphasize the importance of financial literacy. The second prong is counseling: Mesila counselors meet with families to help them better understand their actual situation and to either prevent financial problems or address current financial challenges. Mesila has been endorsed by local rabbis, and a rabbinical board is consulted when issues arise. We ensure confidentiality; no one except the counselors and the family are aware that counseling has been requested or is in process.

Q: Where do you start the educational process?

A: One starting point is fostering awareness of how much things cost and how much income is required to support a desired lifestyle. The fact that expenses are anticipated to increase as a family grows makes planning ahead essential. Preparing a monthly, annual, and five-year budget is tremendously eye-opening. For anyone – from high school students to middle-aged parents – simply preparing a budget will generate a new level of awareness.

Q: Then what?

A: If a family is living a financially balanced life, we may offer some advice to ensure the balance is maintained. In cases where the family is not making ends meet, we help our families realize that their lifestyle, spending habits, and ability to earn are not aligned, and that this is an unsustainable financial situation, one that could worsen with time. We call this the “awareness stage.” Though the facts might be discouraging, counselors highlight that families in similar situations have come up with a realistic plan for success, and that there is hope.

Q: Once families know that their current or prospective financial situation needs to be improved, what is next?

A: Families who recognize that they live in an unsustainable situation generally adopt one of two approaches: 1) They want to do something in the short term to tackle credit card debt, get a mortgage modification, or renegotiate tuition discounts. In other words, they want to fix the result of the problem. Or, 2) they want to take a hard look, line-by-line, at their budget to identify opportunities for adjusting their expenses and/or income to get to the root of the problem.

Our approach is that reason two comes before reason one. We insist on first helping the family reach a balanced monthly budget, and then, only after the budget is balanced, do we address accumulated debts and the like.

Q: Why does Mesila not work to first help the family eliminate accumulated debt and then help them balance their budget?

A: Good question, especially because the accumulated debt is generally the impetus to seek help. Generally, looking for a quick fix, like going into bankruptcy or renegotiating credit cards, could indeed relieve the acute financial problem, but it does not get to the underlying cause of the financial imbalance. A family must take a hard look at its budget to understand that expenses generated by a certain lifestyle need to be balanced with family income. Otherwise, even if a family can have the accumulated debt eliminated, if they do not change either their spending or their earning, they soon will return to the same financial predicament. At Mesila, we help families develop a comprehensive financial plan, and we present tradeoffs for the family to consider in formulating their plan.

Q: Given Mesila’s vast experience in helping families, why don’t you just prescribe solutions and tell families what to do?

A: This is a key element of Mesila. We never tell families what to do. We want all families we counsel to recognize that this is their issue and that they need to own the problem and choose the solution. We help by shedding light on key financial tradeoffs that a family is consciously or unconsciously making. We do not change people. We educate, provide skills, and coach families to help themselves change how they think about and manage their finances. Our counselors act as sounding boards and reality checkers as families explore multiple paths to achieve financial balance.

Q: So is Mesila counseling only for families with low incomes?

A: Absolutely not. We help some families that have excellent incomes but simply do not have the knowledge, skills or behaviors to achieve a balanced budget. Having a good income does not assure financial balance. They may not have the same issues as lower income families, but these families still come to Mesila for help. In a totally different category, we also routinely help younger couples who are trying to understand their finances, which may have changed relatively quickly from their single days.

Q: Can you describe your successes?

A: Our broadest, longest-lasting successes are the most difficult to measure because they are preventative in nature. That is to say, by becoming financially aware, individuals and families either avoid problems or deal with problems early enough to get them under control. The overall results of our counseling services are mixed. We have many cases where people sit with counselors and objectively look at their finances for the first time. Especially if the budget has high discretionary spending, it is a simple task to identify areas for change. Making the change is somewhat harder, however, it has been done successfully many times when the family makes a firm commitment to the process. Credit cards get a lot of blame, but credit card use is not in and of itself the problem; it is, however, an enabler of spending outside of a budget. To borrow and modify a phrase: “Credit cards don’t charge, people charge.” We are most unsuccessful when families look to us for a quick fix, instead of internalizing the necessary changes and sustaining them over time. A common cause of failure is the differing attitudes spouses have about managing money. We are not marriage counselors, but sometimes we need to point out the differences in attitudes and behaviors and their financial implications.

Q: Who are your counselors and how are they trained?

A: The entire organization is comprised of volunteers. Many counselors are financial professionals, but a significant minority is not. Mesila trains counselors to walk clients through the process. Even though, based on their experience, our counselors might know what the family should do, they help the family members arrive at the best decisions on their own. This is challenging to counselors, but we provide them with formal training as well as have them observe more experienced counselors who demonstrate the process. We are very selective in choosing counselors. The technical/financial and human interaction skills necessary to be a successful counselor are a not-so-common combination. We understand that discussing financial issues, especially financial failures, is difficult for people. We emphasize the importance of confidentiality in the training process. We make sure that our counselors are fully qualified, and we put effort into matching counselors to specific families for counseling. Some counselors themselves have experienced the same challenges that our clients face, enabling them to be very empathetic. In Baltimore we are blessed with a cadre of capable, compassionate, willing, and well-trained counselors. Our success is a tribute to their dedication.

Q: If a family is struggling financially, how do you start the counseling process?

A: We ask that families complete a budget form, which enables them to look at their comprehensive financial picture. Once the form is completed, many families immediately understand what changes need to be made, and they can make those changes on their own without any further involvement with Mesila. Others, who feel that they need assistance, submit their budget form to Mesila, which assigns counselors, (usually two at a time), to the family. A family-counselor meeting is arranged. Based on the unique situation of the family, multiple meetings may ensue. The process can take one of many directions and be of either short or long duration. The counseling process is customized to increase the chances of client success. In some cases, counselors suggest that families track income and expenses for an extended period of time so that they see the financial ramifications of their current behaviors.

Q: What are the most common causes of financial difficulty?

A: Unconscious overspending affects many families. This means spending more than the family is bringing in but not being fully aware of it. Other more serious causes include unemployment, underemployment, lack of job skills, and starting to work later in life. These lead to a lower lifetime earning trajectory. Mesila has a working relationship with Joblink and refers individuals to the organization in an effort to explore enhanced employment opportunities that might be within reach. Additionally, discretionary lifestyle choices, sometimes fueled by social pressure, that exceed the family’s ability to pay for them can be very challenging. For example, purchasing a house beyond one’s means can make it difficult to balance the budget. In general, difficulties arise from a lack of awareness of the financial impact of seemingly not-so-important decisions, made over time, that compound into a larger problem.

Q: What advice can you offer to a family that lives a very modest lifestyle but is not earning enough to stay afloat?

A: Mesila works successfully with the majority of families, those who have options to effect change that will produce a balanced budget. There are, indeed, some families that are doing everything right but are unable to balance their budget. Sadly, some families’ problems are so severe that Mesila is unable to really help them achieve balance, but often we can get them somewhat closer. However, I strongly advise any family with such concerns to contact Mesila, since their unique financial challenges may in fact be addressable.

Q: If you were asked by parents of a 20-year-old young man or woman what three pieces of advice they should be giving their children at this juncture, what would they be?

A: First, I would suggest that the young adult obtain basic financial literacy and related skills. Specifically, he or she should acquire a working knowledge of what a budget is, how to build one, how to track against a budget in real-time, how to balance a checking account, and how credit works as it relates to credit cards, car loans, and mortgages.

Second, I would suggest investigating careers based on a person’s acumen and interests. This investigation should include identifying the requisite training for those careers and a timeline for achieving income targets and career progression. Obviously, income is a key factor in a family’s budget, and the short-term income expected from a particular career is an important factor. Yet one should also take into consideration that certain careers have lower or higher income potentials over the longer term.

Third, I would have them get into the habit of learning how to live within a set budget. That is to say, instead of providing whatever adult children request, parents should provide support in a way that enables young adults to make spending tradeoffs. The goal is to learn how to say no to themselves when an expenditure does not fit within their budget. You only asked for three pieces of advice, but there are two others I might add: thinking about one’s lifestyle expectations and developing personal responsibility.

Q: What about a kollel lifestyle? Is it antithetical to Mesila’s doctrines?

A: Absolutely not. Mesila does not make judgments about any lifestyle and certainly does not –and would not – discourage a kollel lifestyle. In fact we have successfully helped kollel families using the same process that we use with non-kollel families. We encourage all of our clients to have a basic financial plan that makes sense. That plan generally should include reasonable assumptions about where money will come from and where it will go. For those who choose a kollel lifestyle, financial vigilance cannot be overstated. A short anecdote may drive home this point. We addressed a local high school class on these matters. The class struggled with a sample family’s budget and were frustrated that the numbers did not add up to a balanced budget. One of the students asked, “What about emuna and bitachon (faith and trust)?” The teacher in the class retorted, “Of course you should have emuna and bitachon, but you have no business having emuna and bitachon unless you first make an effort on your own to achieve a balanced budget.”

Well said.

The next Mesila seminar is TONIGHT, Monday, February 20, at Bnai Jacob Shaarei Zion, at 8:30 p.m. Click here for further information. Mesila can be reached at MesilaBaltimore@gmail.com or (877) 303-6662. All inquiries are treated confidentially.

 

The above article first appeared in the Where What When