Access to Financial Security

For our nation to continue to grow and thrive, we must ensure that all individuals and families are part of an inclusive and equitable economy.

Financial security is dependent on everyone having the opportunity to save and invest in their future. It’s the opportunity to save for a college education, purchase a home, plan for a comfortable retirement, pass resources on to the next generation, or simply putting enough aside to get your family through an emergency.

But how do we get to a place where all are financially secure and living far beyond their next paycheck?

Achieving financial security requires a set of equity-driven policies and strategies at the community, regional, state, and national levels. These policies and strategies must ensure that all Americans—particularly low-income people and people of color—have access to financial education and coaching; as well as affordable, non-predatory financial products and services.

The same groups of people who have been historically left behind in America are rapidly growing in population. By 2042, America will be a people-of-color nation.  It is critical that we support programs and policies that create and protect opportunities for families of color to save, invest, and preserve their financial assets. Addressing the racial wealth gap is critical in ensuring sustained economic growth in a new America where everyone has the opportunity to invest in themselves, their futures, and their communities.

The well-being of our nation is dependent on equity and can only be realized if all families have the opportunity to participate and prosper. In order to safeguard a promising economy for future generations, in which everyone can reach their full potential, we must increase financial security for all families.

Systems that Drive Inequality

Pervasive financial insecurity among American households threatens the future of our families, communities, and the nation’s economic prosperity. The ability to earn and accumulate assets determines whether families can leave poverty behind and achieve economic security. Assets include both tangible and intangible resources such as cash savings, a college education, stocks and bonds, or a home. Without assets, families may be able to subsist day-to-day, but will not be able to cope with a financial emergency, save for their children, or invest in a better future.

The larger, interconnected systems and institutions that weave throughout our lives can support or inhibit a family’s ability to improve their financial security. In fact, specific features of some systems actually strip assets and wealth from the most vulnerable families and communities, increasing their financial insecurity and deepening poverty.

The persistence of poverty is intimately connected to the enormous wealth gap that divides our nation. The top 10 percent of households possesses three-quarters of all the wealth in America. The vast majority of all people in the United States, the bottom 80 percent, account for only 13 percent of the nation’s wealth. The racial wealth gap—the difference in net worth between households of color and that of their White counterparts—is even more acute. White households own 13 times the wealth of Black households and 10 times the wealth of Hispanic households. The loss of wealth that occurred during the Great Recession compounded the wealth gap. While wealthier families are recovering, many lower–income households and households of color continue to experience decreasing net worth.

By 2042, America will be a people-of-color nation; yet, historically, people of color have faced barriers to saving, investing, and preserving financial assets. The impacts of wealth inequality are far reaching and contradict the core American values of equal opportunity, hard work, and upward mobility. While the wealthiest families accumulate disproportionate benefits from the expanding economy, millions of families at the middle and bottom of the economic ladder are living in a state of perpetual financial insecurity. These families are surviving on a day-to-day level, but they cannot cope with a financial emergency or save for the future. In fact, almost half of all American households, and two out of three households of color, do not possess sufficient savings to sustain themselves for a minimum of three months if their income is disrupted; and one-third of African Americans and Latinos do not own any financial assets.

Our solution to the problem of wealth inequality and the racial wealth gap is equity. Equity is the antidote to inequality because it embraces our diversity and works to reverse trends so that everyone can more fully participate in our economy. Diversity is our greatest asset, our competitive edge in a world without boundaries. That vision informs a policy agenda driven by equity, fairness, and inclusion.

Our prosperity depends on an equitable economy rooted in communities of opportunity. Achieving this goal requires a new set of policies and strategies at community, regional, state, and national levels. These policies and strategies must ensure that, over their lifetimes, all Americans have access to higher education; livable-wage jobs; health resources; and opportunities to save, invest, and preserve financial assets.

In communities across the country, public, private, philanthropic, and nonprofit sector leaders are designing policies to expand and protect financial opportunities for families to save and invest in themselves and in their communities. They are working on all fronts of a continuum of financial capability that includes learning about options, accumulating resources, investing to make money go farther, and preserving against losses and predatory practices.

This section highlights key policy recommendations detailed in the PolicyLink report, Breaking the Cycle: From Poverty to Economic Security for All. Please see the full report for background and detail, including footnotes, for each of the proposals.

Tax Alliance for Economic Mobility

The Tax Alliance for Economic Mobility is a national coalition — made up of nearly 40 national advocacy organizations, racial justice groups, think tanks, and tax experts — working together to expand  savings and investment opportunities for working families. The Alliance is co-chaired by Christopher Brown of PolicyLink and Jeremie Greer of CFED.

Financial Security Resources

PUBLICATIONS

 

  • Breaking the Cycle: From Poverty to Financial Security for All
    This paper explores and provides examples of how key changes to components of the financial, education, justice, health, and tax systems can strengthen—rather than undermine—households’ financial security, and increase economic inclusion. It describes innovative approaches that integrate a focus on building financial security across programs, while reforming the systems that most affect the balance sheets of lower-income families and families of color. The featured approaches run the gamut from small local programs to state and federal policy reforms and initiatives. These innovations and the changes that they represent to key systems may be adapted and expanded to strengthen the financial security of vulnerable people and communities nationwide.
     
  • Integrating Family Financial Security into Promise Neighborhoods: A Resource and Implementation Guide
    This guide aims to describe the programs, policies, and practices that set families on a path to financial security while achieving prescribed Promise Neighborhoods results. The tool is also intended to connect Promise Neighborhoods to potential partnerships across the asset-building field. Many of the practices lifted up in this guide are designed to mitigate the negative outcomes associated with lack of academic and family supports, as well as the compounded effects of concentrated poverty and financial instability in communities.
     
  • Building an Equitable Tax Code: A Primer for Advocates
    In theory, tax code–based public subsidies should help all families save and invest, but instead, wealthier households receive most of the benefits. In fact, a recent analysis of the largest wealth- building tax subsidies found that the top 1 percent of households received more benefits from these tax code–based subsidies than the bottom 80 percent combined. This brief answers key questions about tax expenditures: What are they, how do they work, and who benefits? In addition, since the Internal Revenue Service (IRS) does not collect tax data by race, the primer uses data related to the distribution of benefits by income quintiles and the demographics of each quintile to provide a rough approximation of how different racial and ethnic groups do or do not benefit from the different categories of tax expenditures.
     
  • Building Financially Secure Futures: An Approach for Boys of Men of Color
    National demographic trends indicate that people of color will soon become the majority. Yet historically, people of color have not been able to build generational wealth.This brief underscores the growing racial wealth gap in the context of a changing America. It examines the economic and financial challenges facing boys and men of color over the course of a lifetime and lifts up asset-building strategies that can be integrated with targeted services for this group. It also highlights successful practices that are already addressing financial challenges at a community level for this population, and draws from these practices to inform policy recommendations that can be implemented at state and local levels.
     

TOOLS
 

  • Financial Security Glossary
     
  • Effective Communications for the Financial Security Field
    This financial security-focused communications toolkit lays out effective tools to help you set communications goals, figure out who you are trying to reach with what messages, and the best methods to help you get where you want to go.
     
  • Getting Equity Advocacy Results (GEAR)
    GEAR draws from the wisdom and experience of seasoned advocates and action researchers to provide useful benchmarks, frameworks, and tools for measuring progress in equity efforts for policy change across a range of issues. Tracking the progress of equity advocacy is important, and it does not need to be complex or daunting, despite the inevitable twists and turns of policy campaigns. In fact, there are wins along the way to policymaking. GEAR is a tool to help you track those wins and support your efforts in policymaking.