Monday, October 26, 2015

New York University Study Includes Winston County Families - Income Inconsistencies/Health Costs are Major Challenges

Research results on the financial lives of low to moderate income
John Morduch with NYU presents information gathered by US Financial Diaries
families in Winston County and other areas of the United States were the topic of discussion on Friday (Oct. 23) at a luncheon hosted by the U.S. Financial Diaries Research Program at Lake Tiak O’Khata.

Winston County was one of several communities across the country included in the study, Volunteer households from our area, California, Ohio and New York participated in the research that followed families and their financial practices and behaviors from 2012 and 2013.

The project was created by Jonathan Morduch of the Financial Access Initiative at New York University Wagner Graduate School of Public Service and Rachel Schneider of The Center for Financial Services Innovation. USFD received support from the Ford Foundation and Citi Foundation, with additional support and guidance from the Omidyar Network.

Jonathan Morduch presented basic findings from the research to the group and compared local data to other areas. Looking at household earnings, spending, savings and cash flow yielded some interesting results:
  • · Many households do not have a steady income flow which creates a challenge. Monthly income can vary due to difference in work hours, lump payments, health issues, childcare and transportation issues. Lump payments for items such as insurance premiums, medical and auto repair bills present severe challenges to a household living from paycheck to paycheck.
  •  Income variability is increasing as routine middle skill jobs are shrinking. Demand for high skill jobs and some low skill jobs continue to increase but these jobs may either be out of reach or provide an insufficient income.
  •  Health issues and insurance have a significant impact on families. The research showed that more households in our area had insurance coverage (life and health) than in other parts of the country included in the study. On average there was more spending on medical costs in our area versus other parts of the country included in the study.
  •  Efforts to lower medical costs sometimes included – asking for lower cost medicine, skipping medication, taking less than required medication, delaying prescriptions or using alternative therapies.
  •  Most households received financial advice and information first from their parents and then most often from their church.
  •  Late fees and bank overdrafts are relatively common and are sometimes used like a short term loan.
  •  Black households tend to borrow from family more often than white households and white households tend to use credit card debt more often.
  •  Few of the families included in the project used pay day loans but for those that did – usage could be excessive.
  •  Families also attempted to save but savings are typically earmarked for short term use – such as insurance or medical bill payment. Long term savings are often not an option or a priority.
  •  Most households had little understanding of what is considered and affects a credit score.
  • By a large majority, households desired financial stability more than just earning more income.
Over the course of a year, field researchers visited each family once or twice a month, and logged information on income and spending practices. This type of detailed information is gathered with hope to determine which tools and support systems, lower to moderate income families need.

More information on the U.S. Finanical Diaries program and profiles of two local families (names changed for privacy) can be found on their website at