Elaine Thompson, Associated Press
A Check Masters payday lending storefront.

Sherry Williams thought she had her spending perfectly, if precariously, planned out.

Williams, who runs a child-care business, didn't want her kids to go without for the holidays, so she got a credit card at Toys"R"Us that gave her 10 percent off. She planned to pay off the card the very next month when her tax refund came. But then her car broke down. She had to use the tax return to fix the car, and then she couldn't pay down the credit card.

Something like a broken transmission, which might be an inconvenience for a middle-class family, can quickly become a crisis for low-income working moms like Williams, who are unlikely to have savings to fall back on.

Financial coach Robin McKinney first met Williams, whose last name has been changed to protect her privacy, when her car was in need of repair. McKinney is co-founder of Maryland CASH Campaign in Baltimore, a nonprofit that belongs to a statewide coalition offering tax preparation and financial coaching services to low-income families. Establishing savings for emergencies is a goal for most of McKinney’s clients.

Programs like CASH assist individuals facing financial challenges. A study conducted by Abt Associates followed individuals making between $800 and $1,200 a month through financial coaching. Those who had a "bundled" approach including coaching, job placement and training, and financial support like help filing for the earned income tax credit, were three to four times as likely to achieve a "major financial outcome" like paying down debt or creating savings.

No money in the bank

Many Americans, not just the poor, struggle with saving: More than half of American households have less than a month's worth of savings, according to Pew Charitable Trusts. But low-income families, aside from having less money to sock into savings, are also less likely to have access to financial services that middle-class families sometimes take for granted. About 83 percent of people without bank accounts — over nine million Americans — are low-income, making less than $25,000 per year, according to a 2004 report from the Brookings Institution.

These workers face both practical realities and psychological barriers when it comes to saving money. But several organizations are showing that with the right kind of support from financial coaches, low-income people can begin to turn their financial circumstances around and save money for the future.

Several factors compound the financial situation facing low-income earners, including their experience with the banking system. Many are wary of "hidden" fees, which can quickly bite into meager savings. In one study described in a 2013 report from the Stanford Center on Proverty and Inequality, 45 percent of people without bank accounts, or "unbanked" individuals, said they would join a bank if fees were lower and more transparent.

In addition to the nine million Americans without bank accounts, another 24 million households are "underbanked," according to 2013 FDIC data, meaning that they have an account, but don't qualify for loans, leaving them to rely on services outside the banking system — including costly payday lenders.

Non-traditional, high-interest loan operations do a booming business. "There are more payday lenders in California than McDonald's and Starbucks combined," says Leigh Phillips, director of the San Francisco Office of Financial Empowerment, or SFOFE, a division of San Francisco's treasurer's office.

Payday loans can be an attractive option for obtaining cash quickly, but their high interest rates can translate into long-term debt. Although requiring a credit check, SFOFE provides an alternative: small dollar loans with substantially lower interest rates compared to payday loans.

Saving for a rainy day

When people cannot manage their money, they may experience financial distress. Academic studies suggest that debt and financial hardship can contribute to stress and anxiety. Financial coaching programs are designed to help people with both. Even people with meager means can save, said McKinney of the Maryland CASH program, but it requires getting past psychological barriers.

"It's overwhelming to save if you're not making a lot," she says. "So we frame it as, for every $1 you have saved, you don't have to borrow it from a predatory lender, or a friend, or a future bill."

For someone in a crisis, like Williams, the answer might come from finding creative short-term strategies, like bartering for child care or doing in kind work. Some of McKinney’s clients donate blood or sell plasma.

One of her recent clients set up a money tracking system and saved $300 over the course of eight weeks, and another saved $150 for the first time in her life, in the same amount of time. There are over 150 people in the CASH program across the state, at 17 sites, served by 85 coaches. Clients must have incomes falling below a maximum income requirement based on the median poverty level for their area; most households make less than $50,000 and have kids.

Financial stability is about more than having a job, says Beadsie Woo of the Annie E. Casey Foundation, which fights childhood poverty and is one of the funders of the CASH program. "It's about having a job, and savings, and access to support — having all those things at the same time," says Woo. "Financial coaching is the glue that helps people pull those pieces together and amplifies them."

But there are limitations to financial coaching. Saving several hundred dollars might get you out of a crisis, but it won't get you closer to purchasing a home or paying for college. McKinney acknowledges that many of her clients deal with what she calls "structural deficits" — meaning that the structure of the U.S. economy is such that it can be hard to make enough money to really get ahead. For example, a single parent with a full-time, minimum wage job doesn't make enough to pull a family out of poverty.

That's why another part of CASH's service helps people explore career and training options so they can obtain better jobs. Other organizations have been developing programs that give low-income savers a boost through accounts that donate matching funds for every dollar that the earner saves.

Using matching funds to motivate saving can help topple the psychological barriers that financial coaches like McKinney work to address.

With clients like Sherry Williams, McKinney will discuss cash flow, budgets and financial services to help her climb out of debt. But before she "gets to the math" and helps clients develop a financial plan, the first thing McKinney figures out — with all clients, not just low-income ones — is what values drive their decision-making. This allows McKinney to help clients work toward a solution.

For Williams, that value was being a good parent. "Every time I feel like I'm not a good mom, I try to spend my way out of it," Williams told McKinney.

"And I asked her, 'How is that working for you?’” said McKinney. "Then we could talk about habits that would make her feel that she was there for her kids without debt."