Although welfare, food stamps, and housing assistance certainly help low-income families to prop up their incomes during short-term crises, this type of assistance tends to discourage or prevent families from accumulating financial assets. What ensures that families develop the personal and financial resources for a better future is to build a nest egg – through savings, home ownership, and business creation.
The current reality for families across the economic spectrum is unsettling, but it is particularly pressing in the inner city. Whereas one-third of all households have zero or negative net financial assets, net assets for the bottom 40% of the population dropped from $4,400 in 1983 to $900 by 1995.
A further sign of the financial difficulties facing poorer populations is the sharp increase in credit card use. Credit card debt rose from $700 in 1983 to about $1,300 in 1995 for families, and today more than 17% of families with income between $10,400 (the poverty line) and $20,800 carry credit card debt that exceeds their annual income.