A recent study conducted by Rice University’s Kinder Institute for Urban Research in collaboration with the United Way of Greater Houston finds that two-thirds of Houston-area residents are unable to cover three months of living expenses using savings alone, underscoring significant financial vulnerability within the region.
While 64% of area residents reported having regular savings practices, either by setting aside a regular amount (31%) or saving what is left over after expenses (33%), only 1 in 3 of these savers has achieved financial security (sustaining expenses for three months or longer using only savings).
The top challenges cited by residents who are not saving enough included emergencies (80%), housing costs (76%), medical expenses (63%) and credit card debt (61%). Nonessential spending, such as dining out and vacations (63%), also emerged as a significant factor.
Residents who engaged in a savings practice, regardless of their income level, were more likely to achieve financial security, researchers found. Budgeting, while beneficial for managing finances, did not directly lead to financial security without a savings component.
The study is based on data collected from more than 5,500 Harris County residents in late 2023. It stems from a partnership between the United Way of Greater Houston and the Kinder Institute aimed at addressing the financial challenges faced by residents.
“Financial security is a critical determinant of health, education and overall well-being, yet the research highlights a substantial gap in residents’ ability to build the safety net required for resilience and prosperity,” said Dan Potter, director of the Kinder Institute’s Houston Population Research Center and one of the authors of the report. “More than 40% of Houston-area residents cannot cover a $400 emergency expense, and these numbers are even higher for Hispanic and Black residents. Our research underscores the urgency of creating programs that not only encourage saving but also address systemic barriers to financial security.”
Potter and his fellow authors of the report said that the findings signal a need for targeted interventions to help residents establish effective savings plans tailored to their unique circumstances.
“Policymakers, nonprofits and community organizations can play a pivotal role in increasing financial education and providing resources to overcome the barriers identified in this study,” Potter said.
Kinder Institute researchers Joy Njeh and Aaron Niznik are co-authors of the report.
For more information or to request a copy of the report, contact Amy McCaig, senior media relations specialist at Rice, at 713-348-6777 or amym@rice.edu.