Uncertain income and expenses can cause financial crises and financially vulnerable people often do not have access to the tools to manage them.
A key driver of financial vulnerability is the uncertainty experienced by many Americans today. In original consumer research conducted by Commonwealth, 62% of respondents experienced at least one financial emergency in the last twelve months and 89% said that they worried about their households ability to cope with a financial shock.
While financial uncertainty is widespread across income levels, the U.S.. Financial Diaries Project found that it is greatest among low income households. Further, they found that income and expense changes do not move in tandem, and the typical household does not have a financial buffer large enough to weather the volatility it experiences. With minimal emergency savings, limited access to insurance or affordable credit, and limited ability to adjust consumption on a moment’s notice , low-income households struggle to find alternative ways to weather income and expense uncertainty. Commonweath's research found that respondents were most concerned about missing a payment on rent or mortgage and needing to scale back on food. The size of the shock might be small but the relative impact large and long-lasting.
Commonwealth builds solutions that provide positive ways to manage the uncertainty of income and expenses.