Many Americans struggle with debt and limited savings, and they have little chance of moving up the economic ladder. What can be done to address a problem that has devastating consequences for families, communities and our nation as whole? 
A new, free book released today explores these and other questions, and it offers answers and hope. “What It’s Worth: Strengthening the Financial Future of Families, Communities and the Nation” includes 40 essays by the nation’s leading experts on economics, financial services, public policy and philanthropy from across a broad range of sectors.
Michael Sherraden, director of the Center for Social Development, and Margaret S. Sherraden, CSD research professor, contributed the essay “Toward Productive Research Agendas in Financial Inclusion, Security, and Development.”
The book, which CFED and the Federal Reserve Bank of San Francisco released, is available at www.strongfinancialfuture.org. The Citi Foundation provided funding for the book to CFED.
Financial well-being affects and is affected by every aspect of a person’s life—what schools they attend, where they live and work, and how healthy they are. According to the book’s authors, opportunities for achieving financial health need to be integrated across all sectors and in all communities. “What It’s Worth” highlights innovative approaches already happening in communities across the country, such as the growing use of Child Development Accounts (CDAs) for postsecondary education, financial coaching programs aimed at low-income workers and students, and creative workplace strategies that help employees improve their financial health.
“At CSD, we are aiming for a CDA policy model that can one day bring in all children in the nation — meaning every newborn. A nationwide 529 plan, or something like it, will be able to support such an inclusive policy,” the Sherradens write.
Regis Mulot, executive vice president of human resources for Staples Inc., describes how his company developed video games to educate employees about financial health and is using the Treasury Department’s new myRA account to help young and part-time workers save.
Louisville, Kentucky, Mayor Greg Fischer discusses how the city implemented a variety of financial empowerment strategies with local partners to give city workers and residents the tools to reach their financial goals.
“What It’s Worth is an opportunity to take a step back and reflect on the ‘why’ of our work: to empower people to believe in their economic futures and help remove the roadblocks that stand in their way,” said Brandee McHale, president of the Citi Foundation. “To effect that widespread change in the U.S., we must act together, across sectors and promote collaboration towards the financial well-being for all.”
Essays featured in the book explain why connecting financial well-being with jobs, health, housing and the economy is critical to the country’s economic future. It also describes key trends that are driving poor financial health—including age, education, race and ethnicity—and offers promising solutions.
Education, especially higher education, is generally recognized as the surest path to a job with a livable wage, while safe, affordable housing is a key determinant of financial security.
“As our recovery from the financial crisis made clear, the American economy is only as resilient as the American household,” writes Sarah Bloom Raskin, deputy secretary of the U.S. Department of the Treasury. Until recently, most American families enjoyed a rising net worth, but this pattern has disappeared. Earnings are peaking earlier while at the same time a changing job culture—including the rise of the “gig” economy—affect financial stability, writes Phillip Longman, policy director and managing editor of New America’s Open Markets Program.
While demography is not destiny, key drivers of financial health and well-being are race, ethnicity, education and the year a person is born (and enters the workforce). Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, notes the growing importance of these factors in determining who is a “struggler” and who is a “thriver.”
Other essays discuss the growing importance of place and communities in achieving financial health. Income is only one piece of a household’s financial puzzle, note Jennifer Tescher and Rachel Schneider of the Center for Financial Services Innovation. They point to new data sources including their organization’s Consumer Financial Health study and the Federal Reserve Board’s Survey of Household Economic Decision-Making, which provide a “more complete, nuanced and complex picture of consumers’ financial lives.”
The book also makes clear that everyone does not have the same opportunity to make sound financial choices, noting a common misperception that struggling households mismanage finances. In fact, research shows the opposite: Many families with tight budgets demonstrate high levels of financial discipline. To this point, CFED President Andrea Levere writes that “creating financial health and wellbeing is not a just matter of changing individual behaviors but also requires changing systems that shape financial opportunities.”
David Erickson, manager of the Center for Community Development Investments at the Federal Reserve Bank of San Francisco, echoes that thinking: “Financial well-being for families and communities is a foundation for success on any issue that motivates you—better health, improved education outcomes, more vibrant communities, safer streets, more productive workers, or greater economic mobility. This book tackles the big questions of how we create the products, policies and systems that increase opportunities to be financially healthy.”
To explore the essays in “What It’s Worth,” please click here.
The book is the third in a series published by the Federal Reserve Bank of San Francisco. In December 2014, “What Counts: Harnessing Data for America’s Communities,” co-published by The Urban Institute with funding from the Robert Wood Johnson Foundation, explored how to best gather, analyze and use data to improve economic opportunity. The 2012 book “Investing in What Works for America’s Communities,” published with the Low Income Investment Fund, focused on the importance of collaboration across sectors and institutions.