Interlocking Challenges: 

Insights from the CFPB Report on Emergency Savings  and Financial Security 

Nearly one in four American consumers do not have any savings. What insights and strategies can financial counselors gain from the March 2022 report on emergency savings by the Consumer Financial Protection Bureau (CFPB)? 

The report, Emergency savings and financial security: Insights from the making ends meet survey and consumer credit panel, combined data from multiple sources to offer a complex view into the financial realities people experience while trying to build savings. The report compared financial factors faced by American consumers at three levels of emergency savings: 

  • None, no emergency savings (24%) 
  • Some emergency savings, but less than one month’s income (39%) 
  • More emergency savings, equal to at least one month’s income (37%) 

The study found that people with no emergency savings are often juggling interconnected, adverse pressures that increase their financial risk and stress. Comparing the three groups (none, some, and more savings), the CFPB study found that people with no savings are more likely to experience: 

  • Not having a basic savings account (84% no savings, 48% some, 20% more savings).
  • Repeated overdrafts if they have a checking account (35%, 19%, 4%). 
  • A subprime credit score or no credit score (57%, 24%, 8%). 
  • No access to revolving credit due to maxed-out cards or no cards (55%, 25%, 8%).
  • Recent payday or auto title loans (16%, 7%, 3%). 
  • Difficulties paying bills in the last year (79%, 44%, 6%). 
  • Debts in collections (49%, 17%, 5%). 
  • Feeling finances often or always control their life (68%, 35%, 14%). 

The context of these experiences matters. Consumers with no savings are more likely to experience challenges historically related to systemic barriers to wealth accumulation, including being non-white, young, having less formal education, lower income, and less likelihood to own a home. 

People with no savings didn’t lack motivation to save; rather, they faced competing demands for scarce resources while experiencing limited options. Among people with no savings, primary motives for wanting to have savings include emergencies/unexpected needs (67%), debt repayment(44%), and financial security (35%).

The CFPB report asked participants how they save money. For people at all savings levels, the most common response was that they learned from experience (47% of people with no savings, 65% with some savings, 67% with more savings). However, people with no savings were four times more likely to express lack of understanding how to save compared to people with some savings. 

People who have some or more savings were more likely to report that they learned to save from their parents. Thus, in addition to being less likely to face systemic barriers, these savers may benefit from their parents’ material and taught experiences and then build upon that in their own life experiences. 

Overall, this study indicates that people with no savings are navigating pressing financial and systemic barriers to saving while also trying to figure out how to save with limited access to applicable information, resources, and options (such as low-interest credit). 

Financial counselors can help people who have no savings: 

  • Develop a budget that realistically integrates savings goals with interconnected financial pressures, especially debts and bills. 
  • Recognize predatory lending and develop strategies to become eligible to access better products and terms. 
  • Open a savings account and plan strategies to avoid checking account overdrafts, especially for people who have adverse banking histories and experiences. 
  • Assert their rights as consumers, especially regarding debt collections and discrimination. 
  • Navigate the challenges if income/savings goals may affect eligibility for benefits due to income/asset tests. 
  • Access other resources, such as free income tax assistance, which can help clients build savings by maximizing their tax credits and selecting appropriate withholdings. 

Financial counselors can help people turn their goals and strategies into feasible steps and learn from experience. This helps people build realistic pathways for tackling barriers as they work toward savings goals. 

Ratcliff, C., Middlewood, B., Knoll, M. A., Guillory, G., & Davies, M. (2022). Emergency savings

 and financial security: Insights from the Making Ends Meet Survey and Consumer

Credit Panel. Consumer Financial Protection Bureau Office of Research Reports, (22-1).

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