While people in Connecticut on the whole may be on a good financial footing compared to national averages, some of the state’s largest cities are lagging behind.
A national dashboard by the Urban Institute that aims to help local communities close racial wealth gaps finds that delinquent debt, lower credit scores and lower emergency savings are more common in Hartford, New Haven, Bridgeport and Waterbury.
“As we've seen daily expenses increase in inflation, the ability to manage finances is becoming more difficult,” said Oriya Cohen, a policy program associate with the Urban Institute, emphasizing that understanding financial health is more important than ever.
The dashboard splits areas by Public Use Microdata Areas (PUMAs), or areas containing no fewer than 100,000 people. And it aims to pinpoint the many categories that could keep a household from surviving economic shock and working toward generational wealth.
For example, it estimates that more than 60% of households in Hartford don’t have at least $2,000 in emergency savings. Meanwhile, almost half of households have delinquent debt, or debt that is carried for more than 60 days. And just next door the communities of West Hartford, Farmington, Simsbury, Bloomfield, Avon and Canton together have 81% of households with $2,000 of emergency savings and only 6% of households with delinquent debt.
“Emergency savings offer families a cushion against economic disruptions, such as job loss, health emergencies, natural disasters and price increases. And without savings, residents are at a greater risk for eviction, more likely to fall in a spiral of debt and less able to invest in wealth-building opportunities,” Cohen added.
Cohen said the hope is that local leaders can use this resource to address social and racial barriers to financial health. The same cities that are lagging in residents’ financial health also have higher populations of Black residents compared to any other race or ethnicities, according to the 2020 census.
“Local leaders can increase economic resilience and encourage savings through child savings accounts, expansion of the earned income tax credit, and match savings programs,” Cohen said. “They can also address these inequities by protecting households from economic crises through things like eviction diversion programs and expanding access to safety net programs.”
