Earlier this year, Neal Gabler wrote a watershed article published in The Atlantic, entitled “The Secret Shame of Middle-Class Americans.” The author and screenwriter described the moment in which he read a poll conducted by The Federal Reserve that revealed that a staggering number of Americans—46%—did not have the financial savings to cover an emergency of $400 or more, and Gabler realized that he was one of those people.
This was a shocking discovery for many economists who saw signs of otherwise general financial stability. But this lack of financial savings has a couple of sources. For one, it’s hard to plan for emergencies such as illnesses or accidents, changing interest rates, changing mortgage rates, a housing market collapse, losing a job or your child not qualifying for financial aid for college. However, the most significant cause is that most Americans aren’t saving the way they did when savings peaked in the 1970s. Banks have changed the way they give out credit, and increasing numbers of people rack up tremendous debt on credit cards to make purchases and even pay bills. The term that is used for the increasing number of people who fall into this category is “financially fragile.”
Most Americans are more willing than ever to talk about depression, anxiety, stress, and medical issues—but they are ashamed to discuss financial problems because financial insecurity is so loaded with shame-inducing stigmas. For one thing, the American Dream is predicated on the notion of financial security, of the idea that anyone who works hard enough can be “successful.” Though economic instability has affected a wide swath of the American population over the last decade, contributing to financial fragility, many people still feel the stigma dogging them if they aren’t successful—it must appear to others that they do not work hard enough, even if that is hardly the truth.
This financial shame leads to stress, and here is where the numbers begin to reach epidemic proportions: 22% of adults in the United States surveyed by the government said that they felt extreme stress over their finances, which is an already high number; however, almost 75% of adults reported some financial stress that affected their lives. And many of them are working hard and still not making enough to pay cost of living expenses, pay off debts, and then save.
Another layer to the problem is that wages, benefits, and retirement packages aren’t what they were in decades past. People may be making enough to barely cover monthly expenses, but they are not able to accrue any net worth. The housing market is partly to blame, but low interest rates also mean that having a savings account doesn’t have quite the same incentive it did over a decade ago. And average net worth for households is actually dropping—by 38% between 2003 and 2013.
Banks have been pushing credit cards, and consumers rack up initial debt when interest rates are low—however, in many cases, banks can charge whatever interest they want, and so credit card customers may all of a sudden see their interest charges skyrocket by 10 or even 15%. At this point, the credit card debt can become unmanageable, and customers’ monthly payments are only going toward the monthly interest, without paying down the actual debt. However, it is still the choice of the consumer to run up the debt—and consumers understand their culpability in this.
But recognition of the source of the problem doesn’t alleviate the shame.
When people feel financially trapped, the stress can infect every aspect of their lives, especially their relationships. The usual support systems may break down, or partners may feel unable to communicate their concerns, often even keeping their financial fragility from each other.
Stress has deep impacts on the body, increasing the risk of high blood pressure, heart disease, and other illnesses. Additionally, for people already battling heart disease and other illnesses (including cancer), increased financial stress specifically is a culprit in higher mortality rates. A study in Australia also showed that financial stress increases the likelihood of obesity.
The good news is that disclosing financial fragility can actually make people feel better—they’re relieved the secret is out, and they don’t have the added shame to carry around with them. And often times, opening up to others can lead to a network of opportunities, not just for coping mechanisms, but for finding alternative ways to save money. And when more people speak out about this very modern condition of financial fragility, they can help to destigmatize this issue, stripping away the shame from within a growing community.
Facing shame goes a long way to tackle the stress that comes along with it; not all financial woes may be resolved, but facing the issues head-on, or within a community of people similarly situated, can be empowering.