Financial Health and Mental Health: Making the Connections

Annie HarperMHTTC Webcast

June 26th, 2019

Introduction

Annie Harper, PhDProgram for Recovery and Community

Health (PRCH)Yale Department of Psychiatry

Annie.harper@yale.edu

What I am going to talk about – agenda for today:

Introduction and Background

The connection between poverty and mental health

What are financial services and why do they matter?

How can we improve access to financial services that meet the particular needs of people with mental illness?

How We’ve

Learned What

We’ve Learned

…

1. Connecticut Mental Health Center (CMHC) Foundation funded scoping study for initial development of the Financial Health Project.

2. NIMH R34 grant funded study ‘Financial and Mental Health: Exploratory Research and Model Development’ tested supports including one-on-one financial counseling, peer facilitated group support, and a savings club

3. Center For Retirement Research Sandell Grant funded study “Looking Beyond the Payee’, exploring experiences of people with payees, and of payees.

4. Fahs-Beck Foundation funded study “Criminal Justice related Debt and Mental Health: Barriers to Re-entry and Recovery” exploring the impact of debt on the recovery and re-entry of people with mental health challenges coming out of incarceration.

5. Johns Hopkins University 21st Century Cities Initiative funding the New Haven Debt Map, exploring debt of low-income households and developing local policy solutions

What I’m not going to talk about

Assessing individual

capacity to manage money

Understanding control relationships (where one person controls another’s money – rep

payee or conservator)

Financial literacy training

What more do we need to know?• Individual ‘capacity’ matters, but what

determines ‘capacity’ to manage finances? Is it only a person’s mental health status? What about environment in which a person lives?

• Control relationships (when someone controls another person’s money) are important to understand – but what external factors determine how those relationships work?

• Access to financial services plays a key role in determining individual capacity and in shaping how control relationships work – and we know far too little about this.

• Financial literacy training is of limited value. Can education be helpful?

Recovering Citizenship – framework for research and action‘Citizenship’ means:• A person’s strong connection to the 5

Rs of rights, responsibilities, roles and resources that society makes available to its members through public and social institutions and to relationships involving friends & supportive social networks.

• A sense of belonging that is validated by one’s fellow community members

• Financial Health connects with all Rs, especially but not only Resources.

Responsibilities

Roles

RelationshipsResources

Rights

The Social Determinants of Mental Health, poverty and financial services

Social Determinants of

Health

Poverty

Finances and

Financial Services

Poverty and Mental Illness

10%

90%

Persons without a psychiatric disability

Live in poverty Do not live in poverty

33%

67%

Persons with a psychiatric disability

Live in Poverty Do not live in poverty

Vick, B., Jones, K., & Mitra, S. (2012). Poverty and severe psychiatric disorder in the U.S.: evidence from the Medical Expenditure Panel Survey. Journal of Mental Health Policy Economics, 15(2), 83–96.

• Low wages, insecure employment• Supplemental Security Income (SSI) monthly income = $771• Average Social Security Disability Income (SSDI) monthly income = $1,234

• Social drift or social causation?

Poverty and Access to Financial Services

Exercise - why do financial services matter?

• How does your money come to you?• Where do you keep it?• How do you pay your light bill? Your rent?• How do you pay for groceries? Cup of

coffee?• What do you do if your car breaks down?

Have to attend a funeral out of state?• What do you do if you want to buy a new

car? Plan for holidays or a vacation?• What if you do if you want to buy a house?

Pay for an education?• How are you planning for retirement?

Financial services you might use• Direct deposit • Checking account to store your

money• Online bill pay• Automatic payments• Check book• Debit card to make purchases• ATM to withdraw cash• Savings account(s) to save

money

More financial services you might use

• Christmas club or other focused savings account

• 529 (college savings)• Credit card when you need

to spend more than you have

• Loans for large purchases (Auto loan, mortgage etc.)

• 401(k) or similar for retirement

• Insurance – auto, home, health etc.

What if you don’t

have access to financial

services?

• No bank account• Check casher fees• Risks of holding cash• Bill pay fees (payment agent, money orders)• Prepaid card fees• No direct deposit option• Nowhere to safely save money

• No credit card• Costly debt (pawnshops, payday lenders,

auto loans, rent-a-center, informal loans)• Or just don’t get what you need…..

• No insurance• Depletion of savings/assets• Costly debt

Poll

Poll 1. Do you have a bank account? Yes/no2. What percentage of all people in the US do not have a bank

account? - 7% is the right answer3. What percentage of people in the US with disabilities do not have a

bank account? - 18% is the right answer4. Have you ever taken a pawn shop, payday loan, refund anticipation

loan, or auto-title loan? Yes/no5. How much more likely are people with disabilities to use the above

type of loans compared to people without disabilities? - twice as likely is the right answer

Any questions?

Access to financial services is not just a mental health issue

• Financial health is not a special thing just for the mentally ill. EVERYONE needs to manage their money well. We all need to be able to:

• Avoid spending more than our income• Plan ahead for expected larger expenses • Have a cushion (or be able to borrow) in case of

unexpected larger expenses• Financial services are crucial to allow us to do the above.

Why does this matter for people with mental illness in particular?

Because people who are poor and have a

disability have particularly limited access to financial

services

Because they may have particular challenges related to their illness, and financial services don’t help them with

those challenges

• People with a disability are less likely than others to be banked

Disability and access to financial services

1828

50

47

21

68

5

Unbanked Underbanked Fully Banked Underbanked StatusUnknown

With Disability No Disability

Goodman, N., & Morris, M. (2017). Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households. National Disability Institute.

People with a ‘cognitive disability’ are even less likely to be banked

Goodman, N., & Morris, M. (2017). Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households. National Disability Institute.

People with disabilities rely more than others on in-person services

Goodman, N., & Morris, M. (2017). Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households. National Disability Institute.

People with disabilities less likely to have savings accounts

Goodman, N., & Morris, M. (2017). Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households. National Disability Institute.

People with disabilities feel that banks are not interested in serving them

Goodman, N., & Morris, M. (2017). Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households. National Disability Institute.

People with disabilities are more likely to use non-bank, alternative financial services (AFS)

Type of ServiceWith Disability

(%)No Disability

(%)Transaction AFS 31 21

Money Orders 27 15Check Cashing 10 6Remittances 2 5

Credit AFS 15 8Pawn Shops 5 2Rent-to-Own 4 2Payday Loans 4 2Refund Anticipation Loans 4 3Auto-title Loans 2 1

Goodman, N., & Morris, M. (2017). Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the 2015 FDIC National Survey of Unbanked and Underbanked Households. National Disability Institute.

Any questions?

So why not just make everyone open a bank account?

• Wouldn’t that solve the problem?• But... Many of those who are unbanked HAVE BEEN banked in the past and have

left the banking/credit system. It doesn’t work well for many people:• Low incomes….

• Minimum balance fees• Overdraft fees (last minute bill payments)• Fees if pay credit card bill late

• Low credit scores….• No overdraft facility – high fees• Higher interest rates on credit cards, auto loans etc.• Much more besides (housing, employment, insurance etc.)

• In debt....• Garnishing

• Maybe check-cashers, pawnshops, rent-to-own stores, payday lenders aren’t so bad after all?

Research study stories; struggling with a bank account?

• Most earning less than $11,000 pa (SSI/SSDI, SAGA or nothing, ¼ working mostly those with SSDI).

• Just over half have a bank account. • More than half never or hardly ever able to save. • Marlene – doing her best with a bank account

• Overdraft fees “are ridiculous. It doesn't help to have an account the way they take money from you. It’s ok to have fees but these are just too high”.

• Too easy to spend - “I just swipe my card. I know it’s not good, but...”. • Risks of checkbook - “I saw what happened with my father, my

brother was on drugs. I prefer not to have a checkbook in the house at all”.

Struggling without a bank account

• Warren • In chexsystems - can’t have account - “I can’t open a bank account, they won’t

take me no more” (has prepaid card)• Too easy to spend/ATM fees - “Cash... it doesn't really work for me. It just

seems to disappear. I take money out bit by bit after I pay my rent. I could take it out all at once to avoid ATM fees – they cost me $50 per month - but then I might get robbed and I’d spend it too quickly”.

• “I’ve got nowhere to sit down and feel comfortable, no girlfriend to keep me occupied, so I just go out and buy things...I just like spending money – not crazily, but I like spending it. I don’t know why I’m like that. When I get money I feel so happy, I walk into the store and feel like I just have to buy something, even if I don’t really need it”.

Overwhelmed by debt• Veronica: SSDI plus sporadic work income. Borrowed from payday

lender to pay light bill/bail for son. $500, paid 7 biweekly payments of $127, then 4 monthly payments of $164 (Total amount repaid $1545).

• Simon: Income is $1000 from work, $950 from SSDI (total $1950). Expenses: $650 rent, $40 phone, $200 utilities, $150 food, $120 gas, $15 prepaid card fees, $30 health insurance, $70 student loan, $20 rent-a-center, $450 car payment, $135 child support (total $1880). Then car maintenance, tax, barber/toiletries, clothing etc. Forget about emergencies. Now in jail – spiral from ‘ghetto-ubering’ to job loss to arrest

What have we done to try to help? Financial health in practice

Direct Services• One-on-one counseling

– meeting people where they are, flexible, gathering information as we learned about problems

• Peer support group

• Mental Health Systems change:• Training mental healthcare providers

• Financial service systems change:• Promoting accessible/mental health

friendly bank/credit union products• Passbook savings account• Advocating for municipal level financial

counseling• Collaborating on grants

• Identifying broader policy reform needs

Successes – at individual levelIndividual counseling• Tracking spending/sticking to a

budget• Managing debt/fixing credit• Saving/emergency fund• Accountability re. spending• More confidence re. managing

finances• Moral support/less shame• Connecting clients with better

financial products• Advice re. benefits rules

• “the most helpful thing . . . has been writing down what I spend.”

• “I used to just swipe my card, but now I never go shopping without making a list first”

• I’m looking at ways to reduce my expenses that I wouldn’t have considered before. Like eliminating the TV part of my cable. I don’t really need that ....Meeting with you and talking about my needs has forced me…well not forced me but put my focus on thinking on how I want to save.”

Successes – at systems level• Financial services systems level

• Passbook accounts - limited access helps saving

• BankOn accounts –no overdraft option

• Municipal Financial Empowerment Center

• Advocacy for change:• Supportive Banking report

recommendations (View-only accounts, customisablealerts/spending limits)

We need banking services that accommodate the particular needs

of people with mental illness...• Memory and communication challenges• Impulse control at certain times• Trouble with planning and decision making• Difficulties understanding financial issues • Vulnerable to scams• May need supported decision making – including having a

payee/conservator, but also need options where owner of funds retains control

Promising developments• Self management:

• Better banking - BankOn accounts.• Fintech - helpful money management apps such as Dave, Even,

FreshEBT. • Advice services - Financial Empowerment Centers, non-profit debt

counseling (eg Money Management International).• Shared decision making

• Self-or-other managed customizable cards - Truelink, Greenline. • Eversafe/View only accounts (both directions - could help in control

relationships).• Bigger picture

• ABLE: much promise, but needs tweaks.

The future - meeting the spectrum of financial management needs

Struggling to manage,

basic needs at

risk

Can manage

some aspects

Need someone to take control

at times

Want someone to

control some

aspects

Want someone to monitor but not control Need

advice from time to time

Don’t need any help

Needs not static, fluctuate back and forth

• Representative payee/conservator

• Customizable cards• View-only accounts• Advice/training

• View-only accounts/Eversafe• Convenience/real joint

accounts and other shared control options (PoA)

• Automatic bill pay• Psychiatric Advanced

Directives

• Fintech/apps• Financial counseling

(mainstreamed)• BankOn accounts• Customizable spending

limits (Monzo)

Curb-cut effect

Financial services for people with mental illness are simply good financial services

Any questions?

Visit: http://www.mhttcnetwork.org/newnengland

E-mail: newengland@mhttcnetwork.org

Visit: https://medicine.yale.edu/psychiatry/prch/

Please contact me if you have any questions/commentsAnnie.harper@yale.edu