WASHINGTON (Aug. 12, 2021)—The Global Financial Literacy Excellence Center at the George Washington University (GFLEC) and the Center on Longevity at Stanford University today released a new report and policy brief titled “Financial Resilience in America.”
In the report, the researchers analyzed American families’ financial resilience since the Great Recession. To do this, they used data from the FINRA Foundation's National Financial Capability Study to look at three proxy measurements: one’s ability to come up with $2,000 within 30 days to pay for emergency expenses, perceived level of indebtedness, and adequate savings to cover three months of living expenses. Findings include:
- About one-third of American families could not handle a mid-sized financial shock before the COVID-19 pandemic.
- Lack of financial resilience may reduce short- and long-term financial security by impeding people's ability to make ends meet, pay down debt, pay for medical bills and save for retirement.
- Economic downturns can exert pressure on personal finances, mainly through reduced employment and income.
- Financial resilience — and the lack of it — varies substantially across age, race/ethnicity, gender and educational attainment.
- Those most impacted by the Great Recession include women, Blacks, Hispanics, individuals 30-44 years old and less educated individuals. These groups have recovered more slowly than the general population.
Recommendations from the researchers for improving financial resilience and addressing the inequality gaps include:
- Mandating a living wage.
- Expanding risk protections against adverse health events.
- Implementing systematic and targeted financial education programs.
- Relieving student loan debts and curbing the cost of higher education.