Roadmap to Financial Resilience (Draft)
Financial resilience is a household’s ability to financially withstand and recover from economic challenges. Resilience levels (low to high) depend on the size of the financial shock a household can absorb without significant negative financial impacts. IEl’s Advisory Council on Financial Resilience singled out four elements that boost resilience levels along with related strategies and tactics to strengthen resilience levels across the state, particularly for lower-income households.
| Elements | Strategies |
|---|---|
| Routinely positive cash flows | 1. Promote a stable and sufficient income relative to expenses 2. Promote access to safe, affordable financial products and services that meet user needs 3. Promote strong consumer protection laws |
| Personal resources | 1. Develop a culture of savings – Encourage saving as a habit |
| Access to quality benefits | 1. Promote access to quality public benefits for lower income households 2. Provide quality employer benefits that strengthen employee financial resilience |
| Financial know-how | 1. Promote financial education (develop financial skills and knowledge) 2. Promote financial behavior change (develop a mindset and demonstrated ability to effectively use financial skills and knowledge) |
Routinely Positive Cash Flows
Strategy: Promote a stable and sufficient income relative to expenses
How this might be done:
- Boost income
- Raise wages/salaries
- Increase the minimum wage
- Institute a guaranteed income program
- Help household members get better paying jobs
- Create better paying jobs
- Promote entrepreneurship
- Use tax credits and public subsidies
- Raise awareness of existing tax credits and public programs that increase income or decrease expenses
- Examples: Earned income tax credit, child tax credit, child care, healthcare and housing subsidies, etc.
- Evaluate the impact of current support and eligibility levels on household financial resilience levels. Consider changes as needed.
- Raise awareness of existing tax credits and public programs that increase income or decrease expenses
- Manage debt
- Forgive debt
- Offer debt reduction
- Do not tax debt that is reduced or forgiven
Strategy: Promote access to safe, affordable financial products and services that meet user needs
How this might be done:
- Reduce fees associated with use of financial products and services
- Offer lower cost loan products
- Increase youth access to the banking system
Strategy: Promote strong consumer protection laws
How this might be done:
- Cap the cost of borrowing
- Lower fees for financial products and services
Personal Resources
Strategy: Develop a culture of savings
How this might be done:
- Change the narrative
- Promote the message that savings is cool and everyone should have a savings goal for their situation and stage in life
- Use the right trusted messengers and platforms to deliver the message, including social media
- Use incentives
- Raise awareness of existing tax incentives for savings
- Create new tax incentives to promote short-term savings and savings to meet long-term financial goals
- Offer matched savings programs
- Provide support
- Invest in counselors, coaches and others to help support savings as a habit
- Reduce the “friction” in saving
- Increase employer-based savings solutions
- Promote the use of dedicated savings accounts
- Create/promote the use of automated savings tools {e.g., payroll deductions, emergency savings, health savings accounts, etc.)
- Make savings the default option (opt-out) for a percentage of each paycheck
- Make some level of savings mandatory on each paycheck
- Redesign state and federal tax forms to allow refunds to be split between two accounts
- Promote savings when filing for tax refunds
- Promote savings when pay is increased
Access to Quality Benefits
Strategy: Promote access to quality public benefits for lower income households
How this might be done:
- Promote better access for those who qualify
- Address the stigma of accessing public benefits
- Address lack of trust issues held by eligible households
- Raise awareness of public benefits and how to apply
- Address logistical and administrative barriers to access
- Address benefit cliffs and asset limits
- Evaluate the impact of current support and eligibility levels on household financial resilience levels. Consider changes as needed.
Strategy: Provide quality employer benefits that strengthen employee financial resilience
How this might be done:
- Offer benefits against smaller and larger financial shocks
- Examples: paid sick leave, family and medical leave, health, dental and vision insurance, short-term and long-term disability insurance, employee hardship funds, emergency savings plans, life insurance.
- Offer benefits that decrease employee expenses
- Examples: child care subsidies, pre-tax savings accounts
Financial Know-How
Strategies:
Promote financial education, i.e. the acquisition of financial skills and knowledge.
Promote behavior change on financial matters, i.e. develop a mindset and demonstrated ability to effectively use financial skills and knowledge.
How both of these might be done:
- Start early using age-appropriate concepts and skills development
- Promote school-based instruction and skill development across the curriculum
- Engage caregivers in school-based instructional efforts for students
- Promote regular employer-based financial education programming
- Promote community-based partnerships to reach people in safe spaces and using trusted voices
- Promote access to high quality financial information and advice using a “just-in-time” approach before major financial decisions
Advisory Council on Financial Resilience
| Members |
|---|
| Creighton Blackwell, Chief Community and Public Affairs Officer, Coastal Federal Credit Union |
| Leatrice Caldwell, Vice President of Outreach, State Employees’ Credit Union |
| Mat Despard, Vice President of Research and Policy, Saverlife |
| James D. Gailliard, Pastor, Word Tabernacle Church |
| Sonia Garrison, Financial Capability Director, Self-Help Credit Union |
| Ralph Gildehaus, Senior Program Director, MDC |
| Marquita Robertson, Executive Director, The Collaborative |
| Ashley Ruffin, Chief Impact Officer, Civic and Local Government Federal Credit Unions |
| Tina Sherman, Senior Campaign Director, MomsRising |
| Rochelle Sparko, Director of NC Policy, Center for Responsible Lending |
| Justin Taylor, Stakeholder Engagement Manager, Goodwill Industries of the Southern Piedmont |
| Gabe Treves-Kagan, Vice President of Development, Latino Community Credit Union |
| Sandy Wheat, Executive Director, NC Council on Economic Education |
| Perry Wright, Senior Behavioral Researcher, Duke University Common Cents Lab |