Beyond Individual Choices: Financial Health Requires Systems-Level Solutions

The quality of our lives is tied to the financial health of our household—from our ability to pay bills on time, to afford groceries, or to save money for emergencies. Financial health also affects our ability to accumulate long-term wealth for ourselves and our families.  

In partnership with the Trust, the Financial Health Network recently released the Financial Health Pulse® 2022 Chicago Report, a survey of Cook County residents using eight indicators to measure a respondent’s capacity to spend, save, borrow, and plan. While the findings were not surprising, they were still sobering: only 13 percent of Black residents, 16 percent of Latinx residents, and 38 percent of Asian residents are considered financially healthy in Cook County, compared with 49 percent of white residents. Further, our region’s Black and Latinx residents are more likely to be financially vulnerable than their national counterparts.  

Often, we tend to judge a person’s financial situation based on assumptions about their individual choices. Maybe a person struggles to save because they spend too much money on frivolous items. Maybe if they were more ambitious in their professional life, they would see their salary increase. However, the report revealed that even achieving higher levels of income does not ensure financial health: only 40 percent of Black residents and 44 percent of Latinx residents in households making $100,000 or more say they are financially healthy, compared to 69 percent of white residents. 

When we put too much emphasis on perceptions of individual choices, we overlook how systems shape our financial health. Making matters worse, the unfortunate narrative about how financial decisions are made in low-income and in Black and Latinx communities has impacted policy and practice decisions—to detrimental effect.  

The report should serve as a wake-up call to how financially vulnerable many of our Black and Latinx neighbors are. If we want to see households of color strengthen their financial health and ability to build wealth, it will take reforming our banking practices, lending systems, housing appraisal practices, employer practices, income and tax policies, and the structures that enable families to be financially healthy.  

More specifically, we need to look to solutions that increase access to affordable homeownership, make place-based investments that spark economic growth in communities of color, fund workforce development efforts that lead to career advancement and better-paying jobs with access to benefits, support fair lending reforms, and advocate for policies that provide tax relief and additional sources of income for households of color, such as the Child Tax Credit and guaranteed income programs.  

The financial vulnerability of Black and Latinx households in our region is something we must address with expediency and with an understanding that all of us are affected by this issue. When everyone has a chance both to maintain financial stability and plan for their future, their economic outlook benefits them and the economic vitality of our entire region.