Financial System

In LA, a New Resource to Pull Families Back From the Financial Brink

Regardless of income level, a family that is just getting by is locked in a state of stress and vulnerability.

When it comes to household finances, “just getting by” is a difficult and dangerous place for a family to be.

Regardless of income level, a family that is just getting by is locked in a state of stress and vulnerability. The threat of serious financial consequences, such as badly damaged credit, or a nearly inescapable cycle of accruing debt is just a broken-down car or house repair away. The family is unable to build a safety net or save for future goals like college education or homeownership.

This kind of financial fragility goes by another name: liquid asset poverty. And it affects nearly half of all households in Los Angeles County–just under five million residents–according to, a project of the Corporation for Enterprise Development and Citi Community Development.

These “liquid asset poor” households lack sufficient savings to sustain more than three months at the poverty level in the event of an unexpected shock to income. More than one in every ten LA County households do not have a bank account; another twenty percent are “underbanked,” meaning they don’t make use of traditional credit products. As a result, they may resort to alternative–and often predatory–forms of credit, such as payday lenders.

The task of overcoming such an immense and complex set of challenges demands a comprehensive approach that brings together the strengths and expertise of the public and private sectors around innovative, community-based solutions for enabling vulnerable Angelinos to strengthen their financial security.

Last week marked a significant step in that direction.

On June 14, the LA County Board of Supervisors, led by Supervisors Hilda Solis and Sheila Kuehl, voted unanimously to establish a Center for Financial Empowerment in Los Angeles County. The Center, which will be piloted in late 2016 at the Department of Consumer and Business Affairs with support and expertise from Citi Community Development, will provide a one-stop shop where residents can access safe and affordable financial products and services, work on reducing their debt and repairing their credit score, benefit from free tax preparation services and the Earned Income Tax Credit, and more.

Financial vulnerability rarely has a single point of origin. More often it is caused by a combination of several co-determining factors, such as stagnant and/or inconsistent wages, increasingly unaffordable housing and transportation costs, school loans or other forms of debt, unforeseen expenses like a medical bill, and others. With the establishment of the center, Los Angeles County is taking an integrative, intentional approach to financial empowerment for low- and moderate income families, an approach championed by the Cities for Financial Empowerment Fund that has successfully helped thousands of families in communities across the nation to climb out of crisis by offering a suite of services that increase financial access, affordability, and resiliency, all under one roof.

When families are empowered with the resources to pull back from the precipice of financial vulnerability, they can begin to move beyond fragility and uncertainty and start planning for a more secure financial future. Thanks to this effort, such a future is a greater possibility for thousands of Los Angeles County residents.

(Photo credit: Ryan Leynse, via flickr, CC BY-NC-ND 2.0)

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