The Great Balancing Act: Households, Debt, and Economic Insecurity

Abstract

Balancing finances is a complicated and precarious act for many U.S. households, with constant concerns that income will not be enough. What happens when households are no longer able to keep up this balancing act? This research draws on 2019 Survey of Consumer Finances data to examine varying experiences of economic insecurity, measured as whether a household’s expenses exceeded its income in the previous year, and households’ strategies for managing economic insecurity. The author explores the ties among economic security, household debt burdens, and credit market access. By comparing the actual strategies that insecure households used to weather insecurity with the hypothetical strategies proposed by more secure households, the findings show that the resources that protect against insecurity also influence how households manage it. Although most insecure households relied on borrowing when their spending exceeded their incomes, secure households most often recommended spending from savings or finding additional income.