On the brink of financial disaster
Americans are infamous for their lack of savings. And a 2014 study finds that if disaster struck—say a spouse lost a job or a child got sick—almost half of American households (43.5 percent) would not have enough assets to liquefy into cash to survive. The following 10 states have the highest percentage of families that do not have enough liquid assets to survive three months at the poverty level.
A family of four that has less than $5,887 in liquid assets—those that can be converted into cash quickly—is considered poor. This is the threshold used to determine each state's rate.
The ranking is part of the Assets and Opportunity Scorecard by nonprofit Corporation for Enterprise Development, which works to improve poor families' financial security. The most current data is from the Census Bureau's 2011 national Survey of Income and Program Participation panel survey, with a sample of over 40,000 households. The poverty threshold is from the most recent 2013 data on poverty from Health and Human Services.
—By Hailey Lee
Posted 02 Oct. 2014
Almost half of Texas families (49.8 percent) lack enough liquid assets to weather a financial headache. The state also ranks second in the percentage of households (12.8 percent) that are unbanked, meaning these families do not have checking or savings accounts, according to the report.
Although 49.9 percent of Louisiana families do not have enough financial resources to survive poverty for three months, the state has a fairly low debt average per borrower of $7,351, compared with other states.
Exactly half of Tennessee families are liquid asset poor. The Volunteer State also has the highest consumer (non-business) bankruptcy filing rate (6.7 percent) per 1,000 people, the report finds.
7. North Carolina
About 51.5 percent of North Carolina households have a shortage of liquid assets to sustain basic needs for three months after a financial disaster. About 9.3 percent of families in the Tar Heel State have neither a checking nor savings account.
Just over half of Arkansas families (51.9 percent) are liquid asset poor. Bill Clinton's hometown also has the lowest percentage of households (45.8 percent) that have savings accounts.
An economic shock would leave 52.2 percent of the Bluegrass State unable to hold out three months in poverty. Almost 10 percent of Kentucky families are unbanked.
Over half of Nevada families do not have enough liquid assets to survive an economic crisis. The state also has the highest percentage of households (31.5 percent) with zero or negative net worth, which means debt is greater than assets and families have absolutely no financial cushion.
The Peach State ranks third in the percentage of households (55.8 percent) lacking enough liquid assets. The state also has the third-highest percentage (23.9 percent) of families with zero or negative net worth. Georgia families have a median net worth of $46,349, one of the lowest in the country. Net worth is a basic indicator of wealth and financial well-being.
Mississippi has the second-highest percentage of households that are poorly prepared for a financial blow. The report finds that the Magnolia State also has the highest percentage (15.1 percent) of unbanked families, which means they have neither a checking nor savings account. The state also has the second-highest rate of folks (5.15 percent) who are 90 days or more past due on debt payments.
Alabama tops the list with 62.7 percent of homes lacking enough liquid assets to withstand three months of financial difficulty. The state has the fourth highest rate (5.7 percent) of consumer bankruptcy filings.