Report Claims that Over a Third of California Households have few Money in Savings and are at Risk of Financial Ruin
According to the 2017 Prosperity Now Scorecard, over 37 percent of California households have so little cash saved that they couldn’t live at the poverty level for even three months if they lost a job or suffered another significant loss of income. The report was compiled by Prosperity Now, a Washington, D.C. based organization seeking to help people, particularly people of color and those with limited income, achieve financial security and prosperity. The scorecard also shows that 46 percent of households in California didn’t set aside any savings for emergencies over the past year, a higher percentage than the national rate of 43.7 percent. It doesn’t help that 21.1 percent of California jobs are in low-wage occupations. Prosperity Now President Andrea Levere states,
Beyond providing a cushion to get families through emergencies, increased savings and wealth allow families to invest in their futures and gain ground for future generations. It’s clear that far too many people are stuck in economic limbo.
The scorecard found that 21.4 percent of Californians experienced income volatility over the past year, a situation that most often results from irregular job schedules. Lars Perner, an assistant professor of clinical marketing at the USC Marshall School of Business, said California’s high housing costs have put many households on shaky financial ground. The report finds that nearly 20 million U.S. households, about 16.9 percent of the total, have zero or negative net worth, which means they owe more than they own. It gets worse for households of color because they are nearly twice as likely to live below the poverty line as white households, 18.2 percent compared to 9.7 percent, and they are much less likely to own a home or other assets that could help boost their long-term financial stability. Less than half of California’s households of color, about 43.9 percent own homes, compared to 62.5 percent of white, non-Hispanic households. This is certainly a surprising revelation that should encourage people to try and save some money when possible.