By Jack Gurner
WATER VALLEY – Mississippi has the highest percentage of people without a checking or savings account, according to a new report on the state’s financial well-being.
About 16 percent of Mississippians are “unbanked” as opposed to 7.7 percent nationwide. And, the average Mississippi family’s net worth is lower than 44 of the other 50 states – nearly $40,000 less.
The report, “Making Mississippi Competitive: Solutions for Building Assets in Low-Wealth Communities,” provides insight into other barriers hindering many in the state from achieving financial security.
The document, which was released last week by the Foundation for the Mid South and the Mississippi Economic Policy Center, presents a snapshot of the financial problems faced by many Mississippi families.
The Mississippi Young Bankers, the educational arm of the Mississippi Bankers Association, is among the organizations attempting to find solutions to the problems. The MYB program, “Teach Children to Save,” is a national campaign that raises awareness about the important role that banks and bankers play in helping young people develop lifelong savings habits.
Earlier this month, three local members of the MYB, Bill Pullen, Tyler Hill, and Raymond Hawkins, all of Mechanics Bank, talked money to about 240 students at Davidson Elementary School and Faith Christian Academy.
The trio presented very basic financial lessons to the youngsters, said Cam Tyler, President of Mechanics Bank. “They talked to them about how to budget and how to save money,”
The MYB also has a program for older students called “Banking on Your Future” that is aimed at grades 7-12 and teaches basic financial literacy. “We reached more than 75,000 students in the last ten years,” said Pullen, who is a member of the MYB Executive Council.
That program is scheduled for Water Valley in October. “There is a real need to catch these youngsters early and show them how to handle their money,” Pullen added. “The program teaches them how to write a check and how to reconcile their bank statement.”
High Priced Services
The report also warns of the financial consequences for another group of Mississippians referred to as “underbanked” who have a checking or savings account, but rely on alternative financial service (AFS) providers.
Alternative financial service providers or AFS include non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawnshops. The high rate of households using AFS in Mississippi raises concern, as AFS cost more than traditional banking transactions, the report continues.
Households headed by single mothers and non-homeowners exhibit higher rates of being underbanked than married households and homeowners. Thirty-three percent (33.2%) of black households are underbanked compared to only 23.5% of white households, the report states.
While underbanked households that rely on AFS to conduct financial transactions report different reasons for using various products, convenience and perceptions of not being bankable are consistently cited the most. As a result of paying more for AFS than for banking services, working families are left with less money to put towards savings and building wealth.
“We recognize that we are way behind in financial literacy,” said Pullen, “But, that is what the Mississippi Young Bankers is charged to do – educate the next generation of Mississippians.”
The full report is included here in the original .PDF format.