Cook County residents experience high financial stress at more than twice the national rate, a new study by Financial Health Network finds.

     Published in January, the study looked at eight measures of financial health and vulnerability for Cook County residents across all racial and ethnic groups.  The findings show that although white Cook County residents are slightly better off, Black and Latinx households in the County struggle more than their local and national counterparts, across all metrics.

Financial Health Network is a nonprofit organization committed to “develop[ing] solutions that will help all people improve their financial well-being.” Since 2018, the organization has conducted annual “Pulse” studies focused on financial health trends nationwide. The Financial Health Pulse Chicago Report 2022 is the first Cook County study that the Chicago-based non-profit has completed. They hope to conduct another Cook County study in 2024.

The Report’s central finding is that Black and Latinx residents of Cook County are far less likely to be financially healthy, and far more likely to be financially vulnerable, than white residents.

While only 19 percent of all Cook County residents are financially vulnerable, 39 percent of Black Cook County residents and 30 percent of Latinx residents are vulnerable. Put differently, Black Americans are almost twice as likely as white Americans to be financially vulnerable, while Black Cook County residents are more than four times as likely as white residents to be financially vulnerable. (The study also looked at Asian and mixed race households in the County, but these populations are relatively small, so the study produced few significant findings.)

These findings have real world impacts. In Cook County, 23 percent of residents worry about running out of food, compared to 16 percent nationally. In addition, only 66 percent of Cook County residents are able to pay all their bills on time, compared to 70 percent nationally.

Across all eight of the Report’s financial health categories (which encompass spending, saving, borrowing, and planning ahead), the economic disparity between white Cook County residents and their Black and Latinx counterparts is significantly larger than in the country as a whole.

In short, white residents of Cook County are more likely to be financially healthy than the national average, whereas Black and Latinx Cook County residents are more likely to be financially vulnerable than the national average.

Income inequality provides a partial explanation for these findings, Jennifer Axelrod, Chicago Community Trust Senior Director of Learning and Impact explained to the Chicago Reporter, but not a complete explanation. Just 40 percent of Black households in Cook County making over $100,000 a year are financially healthy, for example, compared to 69 percent of white households in the same income bracket. Within all income brackets, Black and Latinx households are far more likely to be financially vulnerable than white households.

What It Means to Be Financially Vulnerable

Financially vulnerable households, the Report explains, lack “most, if not all, the indicators of financial health.” These households struggle with day-to-day finances, bill payment, and both

short-term and long-term savings. Many also have unmanageable levels of debt, poor credit scores, or insufficient health insurance.

Because financially vulnerable individuals must focus on meeting day-to-day expenses, they often have less money to spend on retirement savings and insurance. They also have less to spend on assets that accumulate value and can be passed to the next generation as inheritance. Even if these individuals have some savings, they likely cannot invest in property or the stock market, because they need to save their cash for a rainy day.

Financially healthy households, by contrast, “are able to spend, save, borrow, and plan in ways that will enable them to be resilient and pursue opportunities.” These households are also more capable of passing on wealth to future generations, known as inheritance.

Financial stability takes time to achieve. Even if a low-income-individual earns a higher income one year compared to the last, he or she remains extremely vulnerable to emergency expenses, like medical bills and auto repairs. Short-term financial stability also does not guarantee financial health. As household income improves, day-to-day spending concerns may dissipate, but generating savings, planning ahead, and accumulating wealth require long-lasting financial stability.

As a result, financially vulnerable individuals’ children and grandchildren generally inherit less than the descendants of financially healthy individuals. Thus, each successive generation inherits a financial disadvantage because their parents cannot pass on assets to guarantee stability.

The Geography of Financial Inequality

The Financial Health Network’s Report principally discusses racial disparities in financial stability, but those disparities are inherently geographic in origin, because race and geography are intimately intertwined. Chicago’s history of redlining and other racist housing, schooling, and community-defining rules and regulations have resulted in a highly segregated city. In 2022, for example, the Brookings Institute finds that an incredible 74 percent of Black and white Chicagoans would have to move to different neighborhoods in order for each of Chicago’s neighborhoods to be representative of the overall population of the city.

This means that financial health is concentrated in certain areas of the city. On the North Side of Chicago, where two thirds of the population is white, half of the population is financially healthy. On the far Southeast Side, where people of color make up 95 percent of the population, only thirteen percent of individuals are financially healthy.

In the next article in this series, The Chicago Reporter will further explore the relationship between past discriminatory practices and contemporary inequities in financial health across geographically distinct communities.

Disparities in Homeownership

Another key difference between financially healthy and vulnerable households is homeownership. Overall in Cook County, as in the rest of America, only 38 percent of Black households and 46 percent of Latinx households own the homes in which they live, compared to 70 percent of white households.

To break that down further, in the city of Chicago, homeownership rates of households making over $60,000 a year are stable across racial groups. But in suburban Cook County, fewer Black and Latinx residents own the homes they live in than do white households, even at the same income levels.

Owning rather than renting your home is particularly important when viewed through the lenses of economic stability and generational wealth accumulation. Owning one’s home is, at the most basic level, one of the largest signifiers of independence and achievement in America. Additionally, homeownership—indeed, ownership of any asset whose value appreciates over time—is key to building wealth.

If a household rents their home, the money they pay towards rent disappears. Not only that, but as inflation increases over time, renters must pay higher rates to their landlord. In times of sudden inflation increases—such as after the pandemic—renters are hit especially hard. The Financial Health Network Report found that 24 percent of Chicagoans struggle to pay rent, compared to 13 percent of all Americans.

By contrast, homeowners convert money spent on their residence, over time, into increased wealth. When a household buys a home, their mortgage rate generally remains steady despite inflation. Over time, the difference between the household’s mortgage (a type of ‘good’ debt) and the house’s resale value increases. This difference is referred to as equity, and it is one of the primary ways of accumulating generational wealth.

Crucially, however, this calculation only works if the land value also increases over time.

Adjusted for inflation, the average price of a house in the U.S. has more than doubled over the last fifty years, despite the Great Recession and the Pandemic. But in areas that get less government investment or suffer from high levels of crime, home value is less likely to increase over time. Buying a house in those areas is not as sound an investment.

Generally, though, we should think of homeownership as a fundamental part of financial stability and generational wealth transfer. A future article in this series will further explore the lived experiences of homeowners and renters in Cook County.

The Problem of Credit

Finally, it is important to note that buying a house is not an option for many Cook County residents. It is very difficult and expensive to get a mortgage or other loan without a credit card or with a low credit score.

While 99 percent of white households in Cook County have checking accounts, only 83 percent of Black households do. Only 64 percent of Black households making under $30,000 a year

have checking accounts. These disparities are in part income-based: some households have insufficient cash to open a checking or savings account. The discrepancy is also a result of social factors. Many Black and Latinx individuals are less trusting of banks than are white households, in part due to historically racist loaning practices.

The Chicago Reporter will explore Cook County residents’ relationships to credit and banks further in subsequent articles.

The Study’s Conclusions

It is vital to view imbalances in homeownership and other indicators of financial health through the lens of race. That does not mean, however, that race and financial vulnerability are fully aligned. There are still many poor white households in Cook County; they are just less common than poor Black and Latinx households.

Gender also plays an important role in financial stability: though the Report focused primarily on race, it found that, regardless of household size, income, and race, Cook County women are more likely to be financially vulnerable than Cook County men.

Overall, the biggest factor influencing financial health and stability remains income.

Independent of race, households with lower incomes are less likely to have retirement savings, less likely to have adequate health or life insurance, and less likely to have savings accounts. They are more likely to struggle to cover day-to-day and month-to-month expenses and more vulnerable to sudden emergencies.

In short, Cook County residents are less likely to be financially healthy than the average American, especially if they are Black, Latinx, female, or low-income. This means that fewer Cook County residents are able to achieve financial stability, making generational wealth accumulation extremely difficult for Black and Latinx households and communities in Cook County.

The Chicago Community Trust was the Report’s sole funder. The Trust is a community foundation that has, for more than a hundred years, worked as a philanthropic organization for the Chicago region. The organization has more than four and a half billion dollars in assets, and spent almost one and a half billion dollars in grants in 2021.

The data for the Report came from a study by NORC at the University of Chicago, an independent nonpartisan research institution. In the spring of 2022, NORC surveyed more 5,422 Cook County residents, based on a random sample of addresses.

This article on the Financial Health Pulse Chicago Report 2022 is part of a series that The Chicago Reporter is producing on wealth disparity, financial health, and stability in Cook County. Future articles will dive deeper into historical discrimination, housing, credit, and debt, among other topics. If you are a Black or Latinx resident of Cook County who has struggled with daily expenses, debt, home buying, or other aspects of financial health, The Chicago Reporter would like to speak to you to better inform our coverage. Please, send an email with your interest and a brief summary of your experience to:

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