1. Ups and Downs in American Financial Lives Jonathan Morduch November, 2014

2. Leadership Jonathan Morduch, Professor of Public Policy and Economics, New York University Rachel Schneider, Senior Vice President, Insights and Analytics, Center for Financial Services innovation Principal Investigators The US financial diaries were created jointly by the NYU Financial Access Initiative, the Center for Financial Services Innovation, and Bankable Frontier Associates. Daryl Collins Director Nancy Castillo USFD Manager Timothy Ogden Managing Director PRELIMINARY DATA - DO NOT CITE

3. Sponsorship Leadership support for the project is provided by the Ford Foundation and the Citi Foundation, with additional support and guidance from the Omidyar Network. PRELIMINARY DATA - DO NOT CITE

4. Life-time ups and downs 1020 30 4050607080Age

5. Month-to-month ups and downs 1020 30 4050607080

6. Problem: We have annual data mostly

7. Life is lived day to day, month to month

8. High frequency economic and financial data – Interviews every 2-4 weeks over a year A view into hard-to-see strategies US Financial Diaries

10. PRELIMINARY DATA - DO NOT CITE

11. Empirical Progression IncomeAssets Cash flow

12. 300,000 cash flows collected during the year. About 100 spending categories, 38 income types, 69 financial instruments. 460,000 answers to survey questions on health, financial literacy, time preference, organization, tax refunds, financial instruments, aspirations, income patterns 12

13. Garza Family Income, N. California 13

14. 14 Turn to pawn shops, costly loans Garza Family Income

15. Lucia & Mateo Family, Queens NYElena Navarro, N. California

16. Sandra Young, Brooklyn NYJohnson Family, Ohio

17. Hossein Family, Queens NY Adrian Family, Mississippi

18. Rodriguez Family, N. CaliforniaRita Douglas, Ohio

19. Mike Smith, KentuckyLauren Walker, Mississippi

20. Few families have steady income Income Median - 25% + 25%

21. Spikes and dips: definition Median - 25% + 25% Spike Dip

22. Spikes and dips: 4 per year Average number of spikes during the year: 2 Average number of dips during the year: 2

23. How big? Average spike : 160% x median Average dip: 53% x median

24. 4 per year on average Median - 25% +25%

25. Typical causes Work-hours rising and falling. Health problems Household membership: New children, adults. Children, adults leaving. Childcare and transportation needs. Lumpy gifts and benefits

26. Mismatch 39% of spending spikes align with an income spike 61% with no income spike 25% when income is below median Income Spending

27. Having little long-term saving does not imply reckless spending One implication…

28. Spikes and dips: 4 per year in the average USFD household Income Median Median x 75% Median x 125% Average Spike Median x 160% Average Dip Median x 53%

29. Spending > income: 97% of households had at least one month with excess spending Overdrafts: 48% had one in the last year (if had checking account); 23% had two + Not Much Slack

30. Credit cards 78% not paid in full each month 34% had a card near its maximum Not Much Slack

31. Probability of a 25% income drop Consecutive months: the percent difference from one month to the next

32. Economic Inequalities Income Wealth Steady, reliable, predictable finances

33. Labor Income Volatility For each income source, how steady is the total weekly number of hours?

34. Q: Which of the following is more important to you? A. Financial Stability B. Moving up the income ladder

35. Pew Survey (2011): Sample 2000 Households Stability vs. Ladder-Climbing

36. Dealing with Income Ups and Downs Not sufficient: Financial literacy Budgeting Behavioral tricks and “nudges” Needed: Good jobs Tools for Financial emergencies Putting together lump sums Grabbing and holding onto spikes Enhancing control

37. New York Times Bestseller Summer 2014

38. Income share of the top 10% 1945 1970 1929 35% 48% 41% Income share of the top 10%, US 2010

39. US Poverty Rate, 1959-2010 1970 2010

40. The missing part of the story Year-to-year and month-to-month volatility has been rising too Challenge and opportunity for credit unions

41. Thank you www.usfinancialdiaries.org