What Your Household Type Reveals About Your Financial Security
Despite an improving economy, lower unemployment rates, and a rebounding stock market, many families are still struggling with their finances. Pew’s research has highlighted the financial tightrope Americans are walking.
- Median wages have increased little over the past three decades, and income volatility is the norm: In 2011, 43 percent of households experienced a two-year gain or loss of more than 25 percent of their total income.
- Households in the middle and below have gained little wealth over the past 20 years. In fact, the typical household in the bottom fifth had about the same amount of wealth in 2013 as in 1989.
- The typical household cannot replace even one month of income with liquid savings, and its total financial assets are equivalent to only about six months of income.
These broad snapshots help us understand the overall financial trends experienced by families and provide context for the financial insecurity that half of Americans feel. But in order to grasp why these trends exist and what interventions would be the most successful in helping to support the security and mobility of all families, we need to go deeper.
The interactive Portrait of Financial Security creates this nuanced view. It allows users to explore how demographic differences of educational attainment, race, family structure, and presence of children intersect with family income, wealth, and liquid savings. Users see where distinct family types fall in the overall income, wealth, and savings distributions, and how these various families perceive their financial well-being.
The data show that some factors—such as a college degree—improve all families’ balance sheets. But they also reveal that the benefits of such education are influenced by race and family structure, as college-educated white families are more financially secure than their similarly educated black and Hispanic peers.
Understanding how these demographics combine to create a portrait of financial security is critical for policymakers and program practitioners. Key findings include:
There is a clear racial wealth gap.
- Typical black, college-educated couples without children have less than one-third of the wealth of their white peers and 40 percent of the wealth of their Hispanic peers.
- White, non-college-educated couples without children have more than five times the median wealth of their Hispanic peers.
Across racial and educational groups, households with children have fewer resources than those without.
- Typical white, college-educated couples without children have nearly three times more wealth than their peers with children.
- Typical black, non-college-educated couples without children earn 57 percent higher incomes than similarly situated black couples with children.
- Typical Hispanic, non-college-educated couples without children have 3½ times more savings than their peers with children.
Nearly one-fifth of households have negative net worth. Having children and no college education are defining characteristics for this group.
- In eight of the family types explored, at least a quarter of households have negative wealth. In seven of those family types, the household does not have a college education. Four types have no college and children present.
- Black, non-college-educated singles with children are the only family type in which more than half of the households have negative wealth. At the median, this family type has -$300; a quarter of these households have -$13,000 or less in wealth.
Discover more findings. Explore Portrait of Financial Security here.
Erin Currier directs the financial security and mobility project at The Pew Charitable Trusts. Sheida Elmi is an associate with the financial security and mobility project at Pew.