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June 5, 2013

U.S. Financial Diaries Launches Household Profiles

By USFD

The US Financial Diaries (USFD) project–a partnership among New York University’s Financial Access Initiative (FAI), the Center for Financial Services Innovation (CFSI) and Bankable Frontier Associates (BFA) –was launched to examine the financial lives of more than 200 low- and moderate-income households. Using the financial diaries methodology, previously used in Bangladesh, India and South Africa, the team has been regularly tracking the financial lives, choices and money management strategies of a broad array of households in four different areas around the country (Cincinnati/Northern Kentucky; Eastern Mississippi; San Jose, CA region; and New York City).

Today, we’re pleased to present some early analysis from the data we’ve gathered: profiles of six households participating in the study.

Each Household Profile presents the financial life of a family in our study. While these families are not necessarily representative of the total sample, they illustrate recurring themes: households struggling with income volatility, unplanned expenses, and finding ways to save and invest, but also using creative--and sometimes counterintuitive--budget and  money management strategies to help make ends meet.

These profiles present an unprecedented view into the financial lives of low- and moderate-income US households today. Meet some of the families from our study:

Tim and Clara Adrian: Mississippi
Relying on Erratic Income Sources

Tim and Clara Adrian are in their early 30’s and live in Mississippi in a four-bedroom house that they own. They do not have any children of their own, but they regularly care for foster children, including two teenage sisters with their five-year-old brother living with them today. Their lives are full of social and family connections, and they give both time and money generously to their church and the broader community. While Tim and Clara both earn regular incomes, however, the linchpin in their budget is the income they earn from caring for foster children – income that is erratic and, in many ways, beyond their control.

Rita Douglas: Ohio
Getting By With Help from Friends

Rita Douglas, 62, lives in a two-bedroom apartment in a marginal, sometimes dangerous neighborhood near Cincinnati, OH. By her own description, her family life is “chaotic.” Though she barely has enough money and resources to support herself, Rita regularly helps her children, nieces and nephews, and other relatives and friends. This help takes many forms: sharing her home, cooking dinners, washing clothes, offering the use of her credit card, buying alcohol and cigarettes, protecting cash and providing basic supplies like toilet paper. Late in the month, when Rita runs out of money, she receives the same type of help right back, often from the same people.

The Hossains: Queens
Adjusting to a New Life in the US

Ahmed and Shaila Hossain are immigrants from Bangladesh who moved in 2010 to Queens, NY, where there is a large Bangladeshi community.  Ahmed, 44, has master’s degrees in business administration and economics. Back home his education enabled him to work as an accountant at a large corporation, while Shaila could afford to be a full-time mother caring for their children (Nipa, 7 years old, and Arif, 5 years old). Now, because they lack English proficiency and American educational credentials, they are at the beginning of a long, slow ascent from their current jobs in retail, food services and driving a taxi to the professions to which they aspire. They face many obstacles, including income insecurity that makes it difficult to save money. Their jobs lack benefits such as sick leave, and any days off result in lost wages and financial setbacks.

Mike Smith: Kentucky
Keeping Control by Relying on Cash

Mike Smith, a single man in his mid-50s, lives in a two-bedroom, one-bathroom house in Kentucky, in a small town near the Ohio River. He works many hours as a maintenance man at a local office building, and when he’s not working he likes to watch movies. Even though his resources are limited, he manages to save by strictly controlling how much he spends, even on groceries and medical care. He is frustrated by the fact that he can’t seem to earn more income even though he works hard. His financial life is a simple exercise. He deals largely in cash.

The Johnsons: Ohio
Working Hard but Still Struggling

Sarah and Sam Johnson are a hardworking Ohio couple struggling to make ends meet despite the fact that they both work in stable, full-time jobs and several part-time ones. They own a home and two cars in a working-class neighborhood in a small town near Cincinnati, and they have retirement savings through their work. They support their daughter, Katherine, 8, and two teenagers from prior marriages; Mathew, 20, who is a full-time student living with them and Anne, also 20, who lives with them part-time and soon plans to get married and move. Despite multiple sources of income, which include education aid, their income is volatile and irregular. Their expenses also fluctuate. They don’t have a cushion for unplanned outlays, such as home repairs and medical expenses. They seem to try to cope with their situation by using credit cards, thereby accumulating substantial debt.

The Rodriguez Family: California
Extended Family Strives to Get Ahead

The Rodriguez family is a multigenerational household living in a small town near San Jose, California. Maria Rodriguez, 60 years old, lives with her husband Dean, 75; her mother, Regina, 83; and her two sons, Martin, 36, and Daniel, 34. The Rodriguez’ enjoy a measure of financial health and security. Maria and her husband, Dean, will soon have the first mortgage paid off on their four-bedroom, two-bathroom house. Buttressed by regular payments from Social Security and other federal benefits, the five members of the household bring in multiple sources of income that exceed their day-to-day expenses – and are also enough to pay off debts accumulated from credit card spending and a large home equity line of credit. However, the Rodriguez’ household and financial structure are potentially in flux. Regina plans to leave the house to live on her own. Daniel is engaged to be married and he aspires to buy a house of his own. Certainly, if Regina and Daniel move out, their departure would represent diminished income. In addition, even today, Maria and Dean maintain sole responsibility for the household’s largest fixed expenses, including their mortgage and home equity line of credit payments. Thus, it is unclear what the family’s financial picture, as a whole, would look like if these shifts occur.

 

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