A recent survey conducted by Rice University highlights a concerning trend in financial security, revealing that approximately 45% of Harris County residents cannot come up with $400 for an unexpected emergency.
This figure reflects a significant level of financial vulnerability in the Houston area.
The 44th Kinder Houston Area Survey, published in May, indicates that neighboring counties such as Fort Bend and Montgomery report lower percentages of financial insecurity, with only 34% and 37% of residents respectively stating they would be unable to afford a $400 emergency.
Juan HernandezAriano, a certified financial planner and principal at Wealthcreate in Houston, expressed alarm regarding these statistics, emphasizing the importance of establishing an emergency fund as a critical step toward achieving financial stability.
“It starts [with] setting some money aside, period,” he noted.
“Whatever that is, whatever you feel like, you don’t need a sophisticated plan. A piece of paper, a couple of rules, that can be a financial plan.”
HernandezAriano pointed out that emergencies, such as unexpected car repairs, are nearly inevitable in life.
“Inevitably, at some point, we all have to make sacrifices, either now or in the future,” he added.
“The earlier we start doing sacrifices, the better. It doesn’t need to be drastic sacrifices.”
The survey results align with findings from another Kinder Institute survey released a month earlier, which focused on financial literacy.
This survey found that around one in six residents identified as “unbanked,” meaning they do not have a checking or savings account.
While HernandezAriano understands that some individuals may be distrustful of banking institutions, he stresses the importance of utilizing banking services in an increasingly cashless society.
“The issue is it’s absolutely or close to impossible to know where your money’s going if you’re not using [a bank],” he stated.
“I don’t want to say that, but to me, it’s almost like people who are not trusting banks are doomed to not be able to organize [their] finances because it’s so much harder to track where cash is going.”
He added, “Yes, some banks suck. Yes, some banks are good. You just need to do your research.”
Locational data from the survey revealed stark disparities in banking access across different areas.
For instance, 33% of residents in the Aldine area of north Houston reported being unbanked compared to just 1% in greater Tomball and Klein, located to the northwest of the city.
HernandezAriano, who has worked in personal finance since 2009, observed a trend of tightening budgets over recent years, particularly due to rising costs of living, including housing and insurance.
He remarked, “I do think, now more than ever, it’s more difficult to incorporate emergency savings or create emergency savings, simply because the expenses are much, much higher — the expense-to-income ratio.”
Respondents of the Kinder survey echoed this sentiment, ranking the economy and housing costs as the second and third most significant issues facing the Harris County area.
Despite the challenges posed by tighter budgets, HernandezAriano believes that building emergency savings is still achievable for most individuals.
“It is achievable; I believe anyone with enough income can build a plan,” he asserted.
“Sometimes it’s tedious to sit down with someone just to discuss their goals and what they really want.
But once you understand what you really want in your future — maybe it’s buying a house, sending a child to college, retiring, planning a trip — once you understand what you want then you just simply divide whatever the cost of that thing is by a set amount of months, because it’s much easier to understand the true power of setting money aside.”
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