Study IDs A New Group: 'The Wealth Poor'

Register now

A new group of households dubbed the "wealth poor" has been identified as needing financial help by the Consumer Federation of America, CUNA and the National CU Foundation (NCUF).

At a press conference here last week, the three groups said more than one-quarter of American households are "wealth poor," which it identifies as having net assets of less than $10,000. The three groups used the announcement to tout credit unions as one viable solution to assisting those households in building their asset bases.

In a report entitled, "Identifying the Wealth-Poor in America," the groups said that many Americans who are considered "middle-class" according to income, are in fact "wealth poor."

"Wealth-poor Americans are only a layoff or emergency expenditure away from financial disaster," said CFA Executive Director Stephen Brobeck. "Wealth-poor Americans also lack the financial assets which allow investments in a home, an education, a personal business, or securities."

According to the report, "wealth-poor" households primarily fall into two groups: young debtors and the income- poor. The former group typically has debts larger than assets, and also tends to spend more than they make. The latter group typically has lower incomes and less education than young debtors, but does not carry installment or credit card debt.

Both groups need to do the same rather obvious, but not simple thing, according the report's authors: save more. "When we talk about wealth," explained CUNA and NCUF President Dan Mica, "we're not talking about trying to buy yachts and Rolexes. We're trying to get people off the cycle of living paycheck to paycheck."

One solution might be found in the America Saves program developed by CFA that is being piloted in Cleveland, where Brobeck said 1,500 savers have been enrolled and 10,000 other people convinced to save more. The CFA director said 11 cities are now involved in America Saves, which the National CU Foundation and CUNA support.

In addition, the NCUF said more than 4,000 credit unions have opted to use the "Plan 4 It. Save 4 It" materials that are part of its Building Member Wealth Campaign.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER