Financial resilience steps by policymakers could improve the lives of those hit hardest by Covid-19, a new report is asserting.
The pandemic took the biggest financial toll on women, Blacks, Hispanics adults without a bachelor’s degree and people 30 to 40 said a new report from the Stanford Center on Longevity and George Washington University’s Global Financial Literacy Excellence Center.
Those groups showed significant disadvantages in each of the requirements for financial resilience: income and cash flow management, debt management, risk protection, and financial literacy, the authors noted.
Black and Hispanic individuals, individuals without a bachelor’s degree, and individuals ages 30–44—have much greater difficulty covering financial obligations in a typical month.
The study attributed the lack of income growth for the low-skilled to the loss of jobs that may not return due to globalization, automation, robotics, and artificial intelligence in manufacturing, construction, and retail sales.
The loss calls for policymakers to enable appropriate occupational training and new job opportunities for high school graduates, the report said.
It was suggested the financial resiliency of the disadvantaged could also be aided by the institutionalization of savings tools for short-term emergency needs, similar to those for building long-term financial assets have been established such as automatic enrollment in retirement plans.
To reduce the burdens of student debt, the second-largest source of consumer lending after mortgage debt, the study recommended curbing the cost of higher education:
“Without cost control, we are addressing the “how to pay for it?” question without considering the “why is it expensive?” question.”
To improve financial literacy which has been shown to more than double the number of people who can cover a $2,000 expense in 30 days, the authors urged starting financial education no later than high school and to continue it throughout peoples’ lives.
High school financial education mandates can play a crucial role in the many consequential decisions young adults face including whether to pursue and how to finance a college degree, the study contended.
After high school and college, the authors said financial literacy can be improved by having employers conduct workplace financial education programs.
The research for the project was supported by a grant from the FINRA Investor Education Foundation.
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