Hot off the press

27 May 2019
It is discouraging to see so many households continuing to struggle financially. The good news is that household financial issues are getting far more attention from policy makers and researchers than ever before, and new insights on financial challenges and needs, as well as solutions, are being generated and shared every day.  
 
Here are two new reports – hot off the press – that can help inform financial empowerment practitioners in their work, as well as policy makers: 
 
Short-term financial stability: A foundation for security and well-being 
Aspen Institute, Financial Security Program, April 2019 
 
This report shines a light on the central role that short-term financial stability plays in a person’s ability to reach broader financial security and upward economic mobility, a measurement of individuals’ ability to move up the economic ladder over their lifetime and from one generation to the next. Aspen defines short-term financial stability as having enough of a financial cushion, broadly defined, to cope with everyday financial shocks, while still progressing towards financial goals. Their report focuses on four types of financial cushions –  routinely positive cash flow (income that exceeds expenses), liquid savings (such as cash and money held in checking and savings accounts), access to high-quality credit, and strong social networks; barriers and  strategies to achieving these; and external supports that diverse societal actors can provide. 
 
Are low-income savers still in the lurch? TFSAs at 10 years 
Richard Shillington, Institute for Research on Public Policy Insight, April 2019, No. 27 
 
The introduction of Tax-Free Savings Accounts (TFSAs) in 2009 transformed how Canadians save. One of the main reasons for creating TFSAs was to provide a tax-assisted savings instrument for low-income Canadians to enable them to improve their retirement income. Now, 10 years later, many low-income savers are still not using TFSAs in ways that would allow them to benefit fully from the government transfer programs intended for them in retirement, such as the Guaranteed Income Supplement. Consequently, intended benefits from TFSAs are going untapped. Improving public education and financial literacy may be part of the solution to this problem, but built-in policy nudges and tax adjustments will be more effective. Read the report to find out more!