Freezing in NH

That’s the title of an article in the NYTimes Sunday magazine (and not my question).  In the article the director of the Consumer Federation of America went through some resesarch to figure out why people at the bottom of the economic spectrum don’t save. 

Poring over Caskey’s research, along with other scholarly and financial literature, Brobeck concluded that the only way to get people to save was to reverse the social pressure while trying to effect modest institutional changes. The key, he realized, was to create a network of support for saving.

He persuaded banks (starting in Cleveland) to offer low or no fee/minimum balance accounts and started groups to encourage saving.  Volunteers gave workshops about debt, budgeting, saving, etc. 

As many as two-thirds of those who attend America Saves workshops sign up, and as a group they save half of what they pledge. On average, participants manage to put away $65 a month.

This sounds like a great start.  At one point I was living in NJ and sharing an apartment with a friend.  She was working some temp jobs and cashing her paycheck at a check-cashing place.  After looking at every bank in walking distance (and there were quite a few) we discovered that it really wasn’t any cheaper for her to get a bank account.  They all had some sort of “Jersey Saves!” account, but it was limited in the number of transactions, didn’t include checking, had a $250 minimum balance and a $5 monthly fee.  And the banks weren’t open when she got home, most closed at five or six at the latest, while the check cashing places stayed open until at least nine or ten and were open on the weekends as well.

I was in a much better place financially than she was (it didn’t feel like it to me, but the luxury of having $250 to keep in the bank and being able to wait while checks cleared was something she didn’t have).  The check cashing place only charged $5/check and she got her cash right away.  So I can see how it might be difficult to get started in “normal banking” when you don’t have much to start with.  Once she had some savings (to hit a minimum balance) and could wait a couple days for checks to clear without starving, she did get a checking account and join the financial mainstream (and is now, among other things, a homeowner).