Saving and investing crucial for low-income people

Savings and investment can be scary topics for many people, especially those with a low income.

But misconceptions are abound and as little as $20 per paycheck can help people plan for retirement, according to Sarah Priest, the director of asset development and financial services at Community Action Duluth.

“It’s not always because they don’t have money, but because it’s complicated,” she said. “It’s now always easily understood. It’s about breaking down barriers and understanding tools.”

In order to educate the public on investing, Community Action Duluth will hold “Investing Basics,” a free workshop, this week. The event takes place from 6-8 p.m. Wednesday, Sep. 19, at Community Action Duluth’s office at 19 N. 21st Ave. W.

The seminar is part of Workshop Wednesdays, a monthly Community Action Duluth program that focuses topics such as finances, employment and education.

Laura Zahn, a financial advisor and founder of the Zahn Investment Group, will be the guest speaker and will answer questions at this month’s workshop.

“Mostly what people are going to take away is the difference between short-term and long-term money,” she said. “It’s a real basic kind of thing that everybody should know, but you don’t unless your parents sat you down and explained it or you’ve taken some course, and most people have not,” she said.

Zahn said that saving for retirement has changed drastically over the last generation. While companies used to just give employees pensions, most people today have to pay into a plan and the company will match their contributions.

“My dad had pension, but I don’t get a pension, so that’s flip-flopped in one generation,” she said. “I hope to get social security, but I’m not confident that my children will. It may be gone or changed.”

Many employers offer matching opt-in savings plans to employees after six months of employment and it’s a good idea to start saving earlier, rather than later, Zahn said.

“I always encourage people to do whatever they can to do the match,” she said. “And of course the earlier they start, the better off they are. Because you have 20 more years, you’ll do much better. Starting early counts and even little bits are better than nothing.”

According to Priest, many low-income people aren’t aware of their investing options. For example, employees who receive public benefits can invest money in a 529 plan without that money counting as part of their asset limits, which determine whether or not they qualify for benefits.

“It’s called the latte effect,” she said. “Often time the money is there, but it’s the choices you make with it.”

The goal of the workshop is inform people about their investment options, not to tell them what to do, Priest said.

“There’s no judgment behind the decisions they make, but we want to educate them about those decisions and let them decide for themselves,” she said.

According to Zahn, the best thing people can do is to just learn about investing.

“Even if you feel like basic stuff is over your head, just listen anyway,” she said. “The more exposed to concepts you are, the better off you are. Don’t just say this is too complicated.”

If you would like to attend Wednesday’s workshop, call Community Action Duluth at 218-726-1665 by 10 a.m. Wednesday to reserve a spot. Space is limited and reservations are required.

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