'The Financial Diaries' Profiles the Budgeting Struggles of Working Families

Jul 17, 2017

One of the buzzwords, when it comes to the economy, is “uncertainty.” Politicians blame slow economic growth on uncertainty over future tax rates or incoming revenue. Businesses decide to hold off on hiring because of uncertainty.

All of that leads to a lot of uncertainty for people in middle and lower classes of wage earners - uncertainty over paying the rent, buying food, affording college.

Rachel Schneider wanted to learn how American families are withstanding these economic times. So she and some fellow researchers set out to study families over the course of time to get some data and some insight. The result was the new book, The Financial Diaries: How American Families Cope In a World of Uncertainty

"What all of the families had in common was that they had somebody in the household who was working, and they were all within the income range of between the poverty level and... roughly a middle-class income," says Schneider. "So they were all lower middle-class, working households." 

"In a lot of places of employment now, even if you have a full-time job the number of hours you get each week fluxes up and down."

Much of the data for the book was collected by field researchers, who had in-person meetings with families where they discussed their financial planning methods. This allowed the researchers to ask a lot of personal questions about their finances which they wouldn't be able to ascertain through a more general survey. 

Schneider says these conversations with families were illuminating. In contrast to traditional ideas about job stability, many of the families in the study were dealing with incredibly volatile wages. "In a lot of places of employment now, even if you have a full-time job the number of hours you get each week fluxes up and down. So over half of Americans work hourly jobs," she explains. 

"We want to think people can set a budget, set a monthly expenditure expectation and then stick to it... but the reality is a lot more complicated for people."

Schneider recalls a moment at the beginning of the study where a family explained how they figured out which bills they could pay, and which they couldn't, based on their paychecks for the week. 

"We want to think people can set a budget, set a monthly expenditure expectation and then stick to it, and the only thing you've got to do is help people develop discipline to stick to their goals. But the reality is a lot more complicated for people," says Schneider.

She continues, "The math is more complicated, the variation introduces all kinds of opportunity for mishap and actually what we saw throughout our sample was that people had very big swings between their high paychecks and their low paychecks. And while some of that was seasonable and predictable, that didn't mean it was always manageable." 

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