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Financial Well-Being

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Financial Well-Being

In addition to covering basic expenses, families and individuals need financial stability to avoid debt, build savings and prepare for unanticipated expenses.

When people are able to find decent jobs, provide for their families and absorb the financial bumps in the road we all face, they and their children are more likely to enjoy healthy lives and succeed in school. Everyone benefits, because financially stable individuals and families lead to a more competitive workforce and a stronger community.

However, financial stability can be early thrown off by sudden job loss, health crisis or other unanticipated expense. That’s why it’s important for continue making smart financial decisions – things like building savings and managing credit responsibly – throughout their lives.

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A job loss, health crisis or other unanticipated expense can threaten the financial stability of a household. The asset poverty rate measures the percentage of households without sufficient net worth to provide for basic needs and live above the poverty level for three months in the absence of income. In many ways, asset poverty is more instructive and important than the traditional poverty rate. This is because it factors in households who are just one job loss or health issue away from serious financial crisis.

The threshold used to determine the asset poverty rate varies by family size. A family of four with net worth less than $6,150 in 2017 is asset poor.

According to the Metropolitan Policy Program at Brookings Institution, the average full-time worker without a bank account may spend $40,000 in fees over the course of his or her lifetime just to cash paychecks. Households without an account do not have a safe place to store their money, leaving them open to risks of loss from theft or natural disaster.

When combined with the rate of underbanked households (households that have a bank account but have used alternative financial services—such as payday loans—in the past year), this measure paints a broad picture of households in our region that are financially under-served.

International, national and local economic trends influence layoffs, plant closings and shifts in industries that impact many households on a local level. The percent of individuals experiencing unemployment tells us about the general economic stability of our community.

Because poverty thresholds are only about 30% of the region’s median income, a more comprehensive picture of economic vulnerability includes individuals in households with incomes below 200% of poverty thresholds (or twice the poverty thresholds).

Because poverty thresholds are only about 30% of the region’s median income, a more comprehensive picture of economic vulnerability includes individuals in households with incomes below 200% of poverty thresholds (or twice the poverty thresholds). Children living in low income households are at greater risk of not being ready for kindergarten, reading on grade level or graduating high school on time.

If housing costs exceed 30% of the household income, then these costs are likely to negatively impact the household’s ability to meet other basic needs such as food, healthcare and childcare.