April is National Financial Capability Month. But what does that really mean?
The Center for Financial Inclusion defines financial capability as "...the combination of attitude, knowledge, skills, and self-efficacy needed to make and exercise money management decisions that best fit the circumstances of one's life, within an enabling environment that includes, but is not limited to, access to appropriate financial services."
Let's take that a step further and look at financial capability through the lens of disability.
Twenty-five years after the signing into law of the Americans with Disabilities Act (ADA), there remain persistent barriers to economic self-sufficiency for people with disabilities. Equal opportunity must include options to build the knowledge and skills necessary to make informed financial decisions, access to financial education and coaching, affordable and accessible financial services and products, inclusion in career pathways and the ability to save and build assets.
Being banked is a critical component of financial capability.
In 2015, National Disability Institute (NDI) released the report, Banking Status and Financial Behaviors of Adults with Disabilities: Findings from the FDIC National Survey of Unbanked and Underbanked Households. This unprecedented report provides important insight on the alternative financial choices and decision-making of Americans with disabilities.
Mined from data in the 2013 FDIC National Survey of Unbanked and Underbanked Households, the report finds Americans with disabilities face unique financial obstacles and challenges unlike those experienced by their non-disabled peers. For example:
- Forty-six percent of households headed by an adult with a disability were unbanked or underbanked in 2013, compared to 29 percent of households headed by an adult without a disability.
- Among households headed by working-age persons with disability, nearly one-fifth were unbanked (18 percent) and more than one-fourth were underbanked (28 percent).
- Households headed by working-age persons with disability were significantly more likely to report using alternative financial services than households headed by those without disability (47 percent vs. 35 percent, respectively).
- Households headed by working-age persons with disability were significantly less likely to have a savings account compared to households headed by those without disability. (47percent vs. 73 percent, respectively).
The existence of approximately 2.4 million children and 8.9 million adults living in unbanked or underbanked households, headed by working-age persons with disability, presents an opportunity for banks to forge new and expanded relationships with people with disabilities, their families, the public and private sector community agencies and organizations that support them, and employers that are adding them to the diversity of an inclusive workforce in increasing numbers.
Adding to the scope and strength of these relationships with products and services that are responsive to the needs of people with disability, and are both affordable and accessible, ultimately builds new paths to financial inclusion in the economic mainstream.
When federally-insured depository institutions effectively serve the broadest possible set of consumers, public confidence is strengthened in the banking system, which ultimately benefits everyone.
In addition, the passage of the ABLE Act in December 2014 was an important step toward the financial empowerment of those with disabilities (with an age of onset before 26 years old) to save money for disability-related expenses such as transportation, assistive technology, home modification, education and employment supports. This law, in and of itself, is a game changer for people with disabilities and their families. It is truly a "down payment on freedom" for millions of Americans with disabilities on benefits that have been discouraged from saving in the past in order to stay below the $2,000 asset limit, which historically has kept many in a cycle of poverty.
We must make it a priority in this country to connect leaders from both the disability community and financial services sector, as well as policy makers, employers, regulators, self-advocates and family members to design the next generation of collective efforts to fulfill the ADA's promise of "economic self-sufficiency."
Since its inception in 2005, National Disability Institute remains the first and only national nonprofit organization dedicated exclusively to designing pathways to economic stability and mobility for persons with disabilities. Through public policy research and development and customized training and technical assistance, NDI has become a recognized leader nationwide demonstrating that individuals across the spectrum of disabilities can work, save for the future and advance their financial capability and economic stability.
To learn more, visit www.realeconomicimpact.org.