Despite an improving national economy, far too many Mississippi residents are struggling to achieve financial security. A new report from the Corporation for Enterprise Development (CFED) reveals that most families are living on the brink of a financial disaster. In fact, 62 percent of Mississippi households lack the resources necessary to survive in the event that a job loss or medical emergency leaves them without their primary source of income, meaning they are “liquid asset poor.”
How CFED Defines Liquid Asset Poverty:
“Percentage of households without sufficient liquid assets to subsist at the poverty level for three months in the absence of income, 2010.
Liquid assets are those that are held in cash or can be liquidated quickly: bank accounts and other interest-earning assets; and equity in stocks, mutual funds and retirement accounts (IRAs, 401(k)s and KEOGH accounts). Liquid assets exclude equity in businesses, vehicles, homes and other real estate.
The threshold used to determine the liquid asset poverty rate varies by family size. A family of four with liquid assets less than $5,763 in 2012 is liquid asset poor.”
The new data underscore the vital need for policies that help hard-working families meet their basic financial needs, pay off debt, and have the opportunity to develop solid relationships with high-quality financial institutions. Most immediately, the state legislature should approve a refundable state Earned Income Tax Credit that would put money back in the pockets of people who go to work every day but don’t make enough money to cover all of their expenses.
Source: Corporation for Enterprise Development. (2015). Assets and Opportunity Scorecard, 2015.