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Financial Resilience

Overview

The Financial Resilience view of the Benchmarking app focuses on a household’s ability to withstand and recover from financial shocks. This includes having liquid assets, access to credit, and insurance coverage that can buffer the impact of sudden income loss or unexpected expenses.

The indicators in this view help evaluate not only the resources currently available to households but also their preparedness and capacity to manage adverse financial events. As with the other views in the Financial Health Framework, insights are categorized by their weight and influence: Critical, Supportive, and Contextual.

Critical Indicators

These indicators have the most significant impact on financial resilience and are used to assess how well households can handle economic disruptions without derailing their financial well-being.

  • Estimated Liquid Asset: Readily available financial resources. Higher liquid assets provide a stronger buffer against unexpected expenses or income loss.
  • Estimated Liquid Assets Index: Measures the relative level of liquid assets available for financial stability.
  • Savings Balance Estimate: Larger savings balances increase the capacity to handle financial shocks without resorting to debt or disrupting long-term financial plans.
  • Total Credit Utilization: Lower credit utilization suggests more available credit for emergencies and generally indicates better credit health.
  • Life Insurance Cash Value Estimate: An estimate of the cash value accumulated within life insurance policies, providing a measure of accessible financial resources for future needs or emergencies.

Supportive Indicators

These indicators add nuance to the resilience picture by examining insurance coverage and access to credit products that enhance a household’s ability to manage unexpected financial events.

  • Propensity to Have Renters Insurance: Predicts the likelihood of a household maintaining renters insurance for financial protection.
  • Propensity to Have Home Insurance: Estimates the probability of a household carrying homeowners insurance coverage.
  • Propensity to Have a Personal Line of Credit: Indicates the likelihood of an individual maintaining a personal credit line for flexible borrowing.
  • Credit Score: Higher credit scores typically mean better access to credit on favorable terms, which can be crucial for managing financial shocks.

Contextual Indicators

These indicators provide insight into broader behaviors and access trends that help frame the household’s financial resilience, though they do not directly impact the resilience score.

Percent of Households with HELOC in the Last 12 Months: Highlights households that have opened or used a HELOC within the past year.

Percent of Households with Bank Card: Shows the percentage of households that currently hold an active bank-issued credit or debit card.

Percent of Households with Bank Cards in Last 12 Months: Tracks new bank card ownership among households over the past year.

Percent of Households with HELOC: Represents the proportion of households with a home equity line of credit for borrowing flexibility.