The Norwood News and WFUV complete their five-part series profiling ongoing challenges impacting the Bronx.

With the Bronx experiencing the highest rates of poverty and the lowest median income of all the five boroughs, money is tight. Compounding the problem is education on how to use that money wisely. After all, New Yorkers do not have to learn about personal finance in order to graduate high school — something required in only five other states.

The end result is that many Bronx residents are on their own when learning how to properly manage their finances. A lack of understanding personal finance makes them vulnerable to amassing debt, where they borrow money that steadily accrues interest that they can’t afford to pay. This, in turn, negatively impacts savings, credit score, and securing housing, according to Alma Rojas, a financial coach in the Bronx.

“Thirty to 40 percent of some of our clients’ income goes toward their rent,” says Rojas. “And credit is an issue. Some of them go to rent a new apartment and the prospective landlord turns them down because they have a low credit score.”

Rojas works for The Financial Clinic, a nonprofit group focused on improving financial security for lower income families. She offers individual coaching sessions at different sites in New York City, including the Northwest Bronx Resource Center at University Neighborhood Housing Program (UNHP), a Bedford Park-based nonprofit offering free financial services.

There, clients are taught how to build a budget, set financial goals, and understand the pros and cons of credit cards. Sessions can last anywhere from an hour to four hours, with many clients returning for additional coaching. Most of Rojas’ clients are low-income New Yorkers and some, she says, don’t understand the financial complications facing them.

“I have a lot of customers facing IRS tax liens,” she says. “And sometimes, they didn’t even know they had them until I pulled up their [credit] report.”

“Costly Options”
Although unexpected or unknown that IRS liens can take a toll, more Bronx residents see their potential savings drained by a different source.

According to a 2013 study by the New York City Department of Consumer Affairs, 11.7 percent of households in the city were unbanked. That number nearly doubles in the Bronx, with 21.8 percent of Bronx households having no bank accounts. Rojas notes that many unbanked residents “turn to more costly options.”

Sometimes, those options come in the form of check cashing locations, where customers are charged a two percent flat rate to cash their checks, a rate that banks don’t charge. Check cashing sites are typically scattered across the Bronx, overlapping with largely working poor neighborhoods, according to a listing of check cashing locations on Google Maps and U.S. Census data. The Bronx accounts for almost 20 percent of all check cashing locations in New York State, according to Financial Service Centers of New York, the association representing all licensed check cashing locations in the state.

“It’s a matter of access,” says Jumelia Abrahamson, the director of the Northwest Bronx Resource Center at UNHP. “But it’s also about affordability. Some of our clients don’t have the option to get direct deposit so they feel they won’t be able to afford a bank account.”

Several of the most common banks in New York City, including Citibank and Wells Fargo, require at least one direct deposit and a bill payment to maintain an account. Other banks ask for the direct deposit to meet a minimum amount, or service fees as high as $50 will be charged to the account, thus creating further debt for a low-income resident.

While the check cashing industry might be seen as less conventional, Abrahamson says there’s a reason her clients prefer them to regular banks.

“There’s a certain insecurity when you don’t know how to properly manage a bank account,” she says. “You worry about the fees even if you don’t know what exactly they are.”

Finding banks that offer affordable banking for low-income residents can be difficult as well. A 2015 report by New York City Comptroller Scott Stringer found that 28 percent of banks in the city “did not appear to offer or widely advertise” a low-fee bank account — something that is required under state law. The same report also found that the Bronx has the lowest concentration of banks per household in the entire country.

While evaluating different banks and finding the right one might be one way to attain a certain level of financial security, Abrahamson suggests there’s another way to start.

“Sometimes, it’s all about changing your relationship to money,” Abrahamson says. “If you don’t know how to save, you’ll make the same mistakes even if you have a higher income.”

That’s where people must take matters into their own hands, and according to Rojas, they’re doing just that.

“My coaching calendar is booked until May,” she says. “People want to learn how to manage their finances.”