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article imageNearly half in U.S. lack financial safety net

By Kay Mathews     Jan 30, 2013 in Lifestyle
A study released by the Corporation for Enterprise Development finds that almost half of all American households "are living on the edge of financial collapse" due to having little savings to fall back on should they suffer an income-depleting emergency.
A Jan. 30 press release by the Corporation for Enterprise Development (CFED) states that its report, the 2013 Assets & Opportunities Scoreboard, finds that "Almost half (43.9%) of U.S. households are living on the edge of financial collapse with almost no savings to fall back on in the event of a job loss, health crisis or other income-depleting emergency."
The Scoreboard ranks the 50 states and the District of Columbia in five issue areas: (1) Financial Assets & Income; (2) Businesses & Jobs; (3) Housing & Homeownership; (4) Health Care; and, (5) Education.
According to the CFED, "The 2013 Scorecard assesses states across 102 outcome and policy measures in these five areas to determine the ability of residents to achieve financial security....the Scorecard found sizable differences between states in the percentages of residents with less than three months of savings, ranging from a high of 64% in Alabama to a low of 24% in Minnesota."
In the "Overall State Rankings," Vermont was No. 1 with a score of "A" in four out of the five issues areas, and a "B" in Housing & Homeownership.
States with the poorest scores are clustered in the Deep South, with Arkansas ranked at No. 46, Florida ranked at No. 47, South Carolina ranked at No. 48, Mississippi ranked at No. 49, and Georgia ranked at No. 50. Nevada is ranked at No. 51 with a score of "D" in Businesses & Jobs, Housing & Homeownership, and Education and a score of "F" in Financial Assets & Income and Health Care.
According to NPR, Andrea Levere is the president of CFED, which is nonprofit that "tries to help low- and moderate-income families achieve the American dream." Levere told NPR that it's not easy to achieve the American dream"when all your energy goes into paying the rent and buying food. It's only when you have those basic needs satisfied that you then can think, 'How do I make sure I have the best education for my children? How do I make sure I have the skills I need to be more competitive in the workplace?'"
Among the reports other findings are the following:
*About a quarter (26%) of households are “net worth asset poor,” meaning that the few assets they do have—whether a savings account or durable assets, such as a home, business or car—are overwhelmed by their debts.
*Many households don’t have the basic tools to save for a rainy day, with nearly a third (30.8%) lacking a savings account and 8.2% with no mainstream financial account at all.
*Nearly two-thirds (62.6%) of households of color are liquid asset poor compared with slightly more than a third (34.8%) of white households.
NPR notes that Stuart Butler, with the conservative Heritage Foundation, and Robin McKinney, a former social worker who now runs Maryland CASH, agree that some government initiatives are helpful such as "prize-linked savings." "These are offered by credit unions in Michigan and will be pretty soon in a few other states," NPR states. "The accounts reward savers with a chance to win a big monthly or yearly prize, just like the lottery."
"What it does is to convert the gambling instinct into a savings instinct," McKinney told NPR.
NPR notes that, according to Butler, "It's an instinct he says needs to become much more widespread, if there's a chance of achieving the president's inaugural dream."
"In his inaugural address," states NPR, "President Obama talked about a country where even 'a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else.'"
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