April 15, 2004
San Jose Mercury News
By Mark Schwanhausser

There's no shortage of reasons why it's hard to save money in Silicon Valley. Housing costs are sky-high. It's a pricey place to live. There aren't enough jobs. But many low-income residents struggle to get started because they lack the most basic building block of financial security: a savings account. As a result, they miss out on watching their savings compound with interest and often spend hundreds of dollars a year at check-cashing outfits.

A new city and civic consortium has an ambitious plan to solve that, however. The consortium -- known as Silicon Valley/South Bay Saves -- officially unveiled a pilot program Wednesday to provide free savings accounts to Latino, Vietnamese and low-income residents who attend a motivational financial workshop and then establish a savings target. In addition, volunteer ''wealth coaches'' will contact savers periodically to offer financial advice and encouragement.

The group hopes to enroll 100,000 savers by 2011.

''As common as 'Say no to drugs' or 'Buckle up for safety' -- that is the mantra we want for saving,'' said Jennie Meehan, the program's coordinator. So far, a half-dozen banks and credit unions have agreed to lower the minimum balance required to open a savings account and to waive monthly fees for a year. In addition, dozens of financial institutions, civic organizations, the Internal Revenue Service and San Jose city agencies have pledged to host financial workshops, contribute volunteers and contribute financial backing.

''Instead of thinking to the next check or the next month, this will help them think five years into the future,'' said Salle Hayden, a director with Immigrant Resettlement & Cultural Center in San Jose.

The program's launch at the Mi Pueblo Market shopping center on Story Road underscores longstanding concerns that Latinos are struggling harder than most Americans to make ends meet. Among recent findings:

• Two out of five Latinos in Santa Clara County live in households that lack a savings account -- more than double the rate for the county as a whole, according to a Gallup survey in 2002. Some Latinos pay $850 to $1,000 a year in fees to check-cashing outfits, Meehan said.
• Latino workers are less confident about how to pay for retirement than workers overall. Only half of Latino workers have started saving for retirement, compared with 71 percent of workers in general, according to the national 2003 Minority Retirement Confidence Survey.
• More than 40 percent of Latino workers say they know ''nothing'' about investing or saving for retirement -- more than three times the rate for workers in general, the minority survey said. An additional 37 percent said they have only a limited knowledge of such topics. Signing up Hispanics and Vietnamese won't be easy, consortium volunteers say. Many immigrants distrust banks because of financial abuses in their home countries. Some fear immigration authorities will track down people who open bank accounts. And then there's the general feeling that it's pointless to save a few dollars a week when Silicon Valley's cost of living is so high. ''They say, 'Why bother?' '' said Louise Wen, coordinator of financial education projects for Catholic Charities in San Jose. But, she said, ''It's more important to get that habit started rather than focus on how much you started with.''

Helping savers
A group of lenders is starting a program for low-income residents offering free savings accounts and ''wealth coaches'' to help them attain their savings goals. Some participating lenders and the minimum amount needed to start a savings account under the program.

Alliance Credit Union: $10
Bank of America: $25
CommonWealth Credit Union: $10
San Jose Credit Union $5
Valley Credit Union: $25
Wells Fargo $25

Source: Silicon Valley/South Bay Saves
Infobox: IF YOU'RE INTERESTED
For details, call (408) 559-5554 or click on www.svsbsaves.org.

Abbey Serrano asks a question during a savings workshop Wednesday in San Jose sponsored by the consortium Silicon Valley/South Bay Saves.

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