WASHINGTON U.-ST. LOUIS (US) — Child care poses the greatest threat to a family’s financial security, according to a new study, that finds rent, utilities, and transportation are also high on the list.
In fact, costs for child care have gotten so high, the income needs of a one-parent family with two preschoolers are equivalent to those of a one-parent family with five teenagers.
The Basic Economic Security Tables Index (BEST) provides a broad view of the state of the nation’s workers—the expenses they face, their resources, and their prospects for achieving financial stability.
“The BEST follows a long history of research defining families’ spending and income needs, but reflects a modern economy and contemporary understanding of how families achieve financial stability,” says Yunju Nam, faculty associate at Washington University in St. Louis and assistant professor of social work at the University at Buffalo.
The BEST is different from other “living wage” indexes in that it aims to capture what is needed for household stability and development rather than focusing on subsistence and includes saving components such as emergency savings, retirement savings, education savings, and homeownership savings that are essential for long-term economic security and household development.
Sufficient emergency savings are a small part of most BEST budgets (3-4 percent) but are much higher for those who lack access to unemployment insurance.
Retirement savings of $73 per month per worker or $56 per couple greatly increases the chances of aging in the home and maintaining basic economic security in retirement.
“Meeting basic monthly living expenses alone leaves a family short of genuine financial stability,” Nam says.
“Workers must develop assets to attain both short-term and lifelong economic security.
“The BEST therefore suggests how much workers should save to reach modest asset development goals.”
The index is intended for use by policymakers, researchers, and policy advocates concerned with national policy needs and with changes in workers’ and families’ needs over time.
The incorporated savings components suggest the importance of asset building for household development and stability.
“In order for families to develop,” says Michael Sherraden, professor of social development, “it is necessary to accumulate savings and assets for investments in homes, education, experience, and enterprise.
“This is true for all families, rich and poor alike. Asset holding creates material conditions, as well as outlooks and behaviors, that promote household stability and development.”
The index is a joint effort of Washington University in St. Louis, the University at Buffalo, and Wider Opportunities for Women.
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