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“Financial Inclusion” has been a long-standing goal in development policy circles, borne at least in part out of the microfinance revolution. Belatedly, wealthier countries like the United States have caught on to the need to pay attention to whether households are included in the formal financial system. But a shared and precise definition of what it means to be included, or excluded, remains difficult to come by.
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The traditional narrative about financial success in America is that hard work, steady saving, and a little bit of luck will ensure financial security, a comfortable retirement, and a better future for one’s children. But large numbers of Americans feel financially insecure. In our new book, THE FINANCIAL DIARIES: How American Families Cope in a World of Uncertainty (Princeton University Press; April 11, 2017), we explain why this is happening – and what needs to change – based on the results of the US Financial Diaries project.
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Recently, SSIRLive! featured The Hidden Financial Lives of America's Poor and Middle Class, a 2-part webinar and blog series, highlighting research based on the US Financial Diaries. The research illustrates how current programs and policies for helping poor and middle class households achieve financial stability are based on an outdated understanding of the reality of their financial practices.
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Laura Choi of the Federal Reserve Bank of San Francisco, Kate Griffin of CFED, and Ellen Seidman of Urban Institute recently discussed their forthcoming book, What It’s Worth: Strengthening the Financial Future of Families, Communities and the Nation, on Medium. In discussing the book's themes, the authors also referenced research from USFD that dispels the myth that struggling households mismanage their finances.
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Recently, Next City featured an overview of the US Financial Diaries project, outlining some initial findings on income volatility. The piece emphasized how data on volatility in USFD households is also linked to the difficulties many Americans face in budgeting and saving for the long term.
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Andrea Levere, President of the Corporation for Enterprise Development, recently described the role that employers can play in helping American workers establish greater financial security in a feature for The Huffington Post.
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Recently, The New York Times Magazine ran a feature on the bail process for petty crimes, with a focus on the Brooklyn, NY court system. Although bail was historically set as a bond to ensure a defendant will return to court for trial, it is increasingly used as a tool for incarceration. According to the article, at any given time, 450,000 individuals in the U.S. are held in detention awaiting trial because they were unable to pay their court-assigned bail. A disproportionate number of these are poor.
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The Washington Post featured research from the US Financial Diaries project in a recent review of smartphone apps and tools designed to help individuals manage their money and build savings.
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Because many working families aren’t saving for the long term, it is widely assumed that they are not saving at all. That’s not necessarily true. Research from the US Financial Diaries project shows that many working families do save. But they save for the short term — not the long term.
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This past July, the Aspen Initiative on Financial Security held its fourth annual Financial Security Summit. Participants convened for a session titled, “Income Volatility and Economic Shocks.”
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Despite recent economic growth and falling unemployment, many American workers are still struggling to make ends meet. Financial capability programs can help participants alleviate some of their financial struggles through knowledge and access to the products and services they need to manage their financial lives effectively. CFED recently profiled programs that are integrated into the workplace setting.
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A new report from the US Financial Diaries project provides evidence that lower income households are saving up for frequent, short-term emergencies that prevent the growth of long-term savings. Could 401k style auto-enrollment programs help to manage both long- and short-term savings goals?
Recently the AARP blog proposed such an idea, citing research from USFD
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Most financial literacy programs are geared toward steady paycheck earners with long-term savings goals. But how can programs assist households that are struggling with volatile incomes and unpredictable expenses?
Recently Mediaplanet included a feature on the findings of the US Financial Diaries project and how they can relate to more effective financial literacy approaches.
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Two new USFD Issue Briefs explore the issue of savings. Particularly, what our data show in terms of how families are building up savings for emergencies and how they differentiate short- versus long-term savings.
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The Toronto-based Globe and Mail featured work from the US Financial Diaries on employment and income volatility in a piece on the economic realities of low-wage workers in the sharing economy.
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The Center for Disease Control reports that nearly half of all adults in America have a chronic health condition – a health problem like diabetes, arthritis, or obesity that limits behavior for long periods. Chronic diseases are not only among the most common medical issues faced by Americans. They’re also the most costly, accounting for 84 percent of all health care spending in 2006. The burden of medical costs in America is no secret. And the question of how people – especially the poor – can afford to stay healthy remains wide open.
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Data from the U.S. Financial Diaries give us an opportunity to zoom in on household composition and how it plays a role in financial well-being. We know that changes in household structure can make a difference in income and poverty level, and early USFD analyses show that it’s not necessarily in ways we might expect.
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A recurring theme in USFD research is that low incomes are often volatile incomes. To cope, some households create predictable income spikes through tax refunds and credits [link to previous post]. Others buffer against uncertain income by saving up lump sums. We see that people can get creative to mitigate the difficulty of saving money on a low and volatile income. Savings groups are one common, informal strategy to help households save.
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It was hard for many of the USFD households to know what their income would be from month to month. Some dealt with the uncertainty by relying on predictable income spikes throughout the year. USFD collected data on two such spikes: tax refunds and credits and savings group payouts.
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Last week a coalition of NYC-based nonprofits released a report on the financial status of immigrants in Queens. It’s part of a growing body of research drawing attention to how financial service providers can meet the distinct needs of America’s massive immigrant market. Just last summer the Center for Financial Services Innovation published a national, in-depth analysis of immigrants’ financial needs and recommendations for addressing them.
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