Between Juneteenth and July 4th, I’ve been thinking a lot about freedom, specifically financial freedom. At this point in my life, I feel more financially free than I ever have before. My partner and I can easily pay our bills, meet our needs, and treat ourselves once in a while without worrying about busting our budget. Recently, we hit the milestone of 4 months worth of savings in our emergency fund. My student loan debt is paid off and we’re chugging away on my partner’s debt. We may not be completely free, but we’re getting there … and that’s exciting.
That being said, I realize that feeling this way puts me in the solid minority of most Americans. According to research by the Financial Health Network, as of August 2020 only a third (33%) of people in America could be considered financially healthy, as measured by these indicators: spending less than income, paying bills on time, sufficient liquid and long-term savings, manageable debt, appropriate insurance, credit score, and planning ahead financially. Over the past year, financial health disparities have widened by race and income, and the financial health gap between men and women has persisted. While I wish we could measure financial health as if we all started from the same place in life, it’s just not that simple. We have to take into account the systemic barriers that create inequality.
This week I’d like to share with you my vision of financial freedom — one that isn’t just for the privileged, but for all people:
A world where everyone has at least 3 months of expenses saved for emergencies. Imagine what the last year would have been like if everyone had this safety net. We saw so much generosity and sharing, but I think having everyone on firm financial footing to start with would have radically shifted the short- and long-term impact. It might also have allowed people to see how factors out of a person's control (layoffs, market downturn, illness, loss of a loved one, etc.) can dramatically change their financial outcome, making people who didn’t experience this outcome more likely to reach out and help.
A world with no racial wealth divide. Imagine a world where race is not a factor in wealth accumulation: where homes are not devalued because they are located in communities of color; where people of color are not paid less (or even unpaid) for the same work; where they have the same access to services and community support. According to TaxVox’s analysis of the 2019 Survey of Consumer Finances by the Federal Reserve Board: “The average household net worth (total assets less debt) for Black households was $142,000 in 2019, compared with $166,000 for the average Hispanic or Latino household and $981,000 for the average White household.” This racial wealth divide impacts almost every area of a person’s financial life, from emergency fund availability to salary to investing to generational wealth. In order to make a world like this possible, there are a lot of systemic changes that need to be made in addition to repairing the significant damage done in the past.
A world with equitable wages for all workers. Imagine a world where everyone was paid according to what their work is worth. This isn’t to say everyone would be paid the same amount — job responsibilities, experience, and skill-level would (and should) be taken into account — but what if there were a consistent standard, where race, gender, gender expression, and other pieces of our identity were no longer a factor in putting together an offer letter? I recognize some industries have standardized this process, but too often the process of pay and benefit negotiation is entirely subjective, putting the onus on the employee (particularly the marginalized employee) to advocate for themself.
A world with free healthcare for all. Imagine a world where people don’t avoid going to the doctor or filling a prescription because they are unsure if they will be able to pay the bill. A world where you can sit by the bedside of a loved one who is ill or injured, focused on them and not the cost of their care. A world where those with serious accidents or on-going medical conditions are not punished financially for situations out of their control. This isn’t about politics — I don’t care much about how it happens (whether it's through the government or through private companies) or how the care is distributed. I believe access to good healthcare is a right, not a privilege. Yet too many people are financially ruined by medical bills from their or one of their family members’ unexpected illness. I still viscerally remember the years (yes, years) after my husband’s accident when we received individual bills that amounted to more than my first year of college. I’m so grateful that we had excellent health insurance and that I understood what I did and did not need to pay out of pocket. I can’t fathom what our financial life would look like today had we been uninsured.
A world where education is free. Imagine new graduates who aren’t saddled with mountains of debt right at the beginning of their careers (setting them back financially in countless ways) and parents who don’t need to sacrifice dollars that might go toward their own retirement savings, just to pay for school. I currently work for a school that offers free tuition to all incoming students. While students still need to pay for their own living expenses (and some need student loans to cover these costs), most students now leave our school without accruing additional debt.
What other elements of financial freedom for all would you add to the list? And what might it take for this vision to become reality?