Chicago, IL, Sept. 29, 2020 (GLOBE NEWSWIRE) — The Financial Health Network, the nation’s authority on financial health, in partnership with the GenForward Survey research program from the University of Chicago, today released a new report called “Race, Ethnicity, and The Financial Lives of Young Adults: Exploring Disparities in Financial Health Outcomes.” The report finds that Black and Latinx young adults face unique challenges in building and maintaining financial health that their White and Asian American counterparts do not.
Compared to their White and Asian American peers, Black and Latinx young people have:
- Less liquid savings which leave a small financial cushion to navigate through an emergency
- More unmanageable and high cost debt which limits wealth building opportunities and access to other low-cost debt
- Less generational wealth transfers from their families, due to the enduring racial wealth gap
- Gaps in financial confidence around long-term financial planning, health and insurance coverage.
“A legacy of systemic racism has taken a toll on the financial lives of Black and Latinx young adults,” said Thea Garon, senior director, Financial Health Network. “Today, the financial lives of Black and Latinx adults are characterized by a higher degree of financial precarity than their White and Asian American peers.”
Despite being the most diverse group in the nation’s history, today’s young adults are often considered to be a monolithic group. This new report, co-authored by the Financial Health Network and the Genforward Survey, seeks to explore key differences among this diverse group by shedding light on how young people are spending, saving, borrowing, and planning. The report leverages the Financial Health Network’s FinHealth Score measurement framework and nationally representative data from GenForward, a first of its kind survey of more than 3,000 young adults ages 18-36 that considers how race and ethnicity influence how young adults experience and think about the world.
“As the nation continues to grapple with the coronavirus pandemic, a corresponding economic crisis, and political and social uprisings lead by young people across the nation, our study provides key insight into how young adults are faring – or not faring – within current conditions,” said Cathy Cohen, professor and principal investigator of GenForward. “The negative impact of the current climate and the history of racial capitalism on the financial futures of Black and Latinx young adults is devastating. We must act now to transform the economic landscape and provide young adults with the resources they will need to come out of the pandemic on solid financial footing and moving toward economic justice.”
Key research takeaways include:
- More than half of Black (56%) and Latinx (59%) young adults say they do not have enough savings to cover at least three months of living expenses, compared with 48% of White and 32% of Asian American young adults.
- A quarter of Black young adults (25%) say they have no personal savings, compared with 14% of Latinx and White young adults, and 6% of Asian American young adults.
- A majority of Black (54%) and Latinx (45%) young adults say they would be unable to cover a $400 emergency expense without borrowing or selling something, compared with 34% of White and 29% of Asian American young adults.
- 31% of Black and 28% of Latinx young adults report having more debt than is manageable, compared with 22% of White and 17% of Asian American young adults.
- Black and Latinx young adults are more likely to have high-cost forms of debt, such as outstanding credit card balances, and less likely to have wealth-building debt, such as mortgages: 19% of Black and 22% of Latinx young adults have a mortgage, compared with 32% of White and 36% of Asian American young adults.
- 28% of Black and Latinx young adults say that debt has delayed them from continuing their education, compared with 18% of White and 14% of Asian American young adults.
- 30% of Black and 37% of Latinx young adults say their families could help them cover an unexpected bill of $1,000, compared with 45% of White and 53% of Asian American young adults.
- Only 18% of both Black and Latinx young adults say their families could help them cover college tuition or pay off student debt, compared with 25% of White and 40% of Asian American young adults.
- Just 14% of Black and 15% of Latinx young adults say their families could help them cover a down payment for a house or condo, compared with 21% of White and 31% of Asian American young adults.
- 64% of Latinx young adults say they are not confident they are on track to meet their long-term financial goals, followed by 55% of Black, 53% of White, and 55% of Asian American young adults.
- Latinx young adults are significantly less likely to agree with the statement “My household plans ahead financially” than their peers. 58% of Latinx young adults do not agree with this statement, compared with 45% of Black, 36% of White, and 31% of Asian American young adults.
- 68% of Latinx young adults say that they are either not confident their insurance policies will provide enough support in an emergency, or that they do not have any insurance coverage, followed by 63% of Asian American, 57% of Black, and 56% of White young adults.
For additional findings or more information regarding the survey structure and methodology, please visit the Financial Lives of Young Adults report.