By Taylor C. Nelms, Financial Health Network
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What Americans can afford today shapes what they can build tomorrow. Our upcoming Pulse report offers a new look into affordability and financial health.
What do we mean when we say “affordability”?
Is it inflation, a way to translate CPI numbers into kitchen-table economics, from the price of eggs to the hammer of a hospital visit? Is it wages, which may be rising (unequally) but are still falling behind the cost of living? Is it the sticker shock of a house or a college education—things that have historically served as on-ramps to long-term wealth-building? Is it broken markets for things like utilities or health insurance or childcare?
Back in January, The New York Times polled voters about their feelings on the affordability of a range of goods and services. The majority felt that a middle-class life was out of reach and pointed to the cost of things like buying a home, paying for healthcare or childcare, earning a degree, or saving for retirement as evidence.
In June, the Times published an op-ed by former Federal Reserve Vice Chair Lael Brainard and former Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra presenting additional survey data showing that the cost of food—that most basic of necessities—has become a leading source of financial strain for middle-class families.
These pressures aren’t just today’s financial headaches. They’re the core factors shaping which households will enjoy financial security and opportunity—and which ones won’t—in the years ahead.
The Growing Unaffordability of a Middle-Class Life
The “middle class” is a slippery thing to pin down. Its meaning has changed over time and means different things to different people. Income alone can’t capture its emotional, social, and political force. What the phrase really encompasses, I think, is the suite of things that we collectively agree should furnish a good life—the kind of life we want to live and feel we ought to be able to live.
Affordability is the word we now reach for to name what it costs to live that life, however you may define it. Affordability is both the cost of getting ahead, and it is the cost of getting by. It’s the mortgage, and it’s the rent. It’s the student debt payment, and it’s the cost of groceries.
All of these things are drifting further out of reach, but their retreat is uneven in a way that is increasingly dividing us. The wealthiest 10% of households hold roughly 87% of the total value of corporate equities and mutual fund shares, and spending by the highest-earning households is outpacing that of lower-income households at a growing rate. By one popular estimate, the top 10% of earners account for almost half of all consumer spending. Is it any wonder consumer sentiment is at historic lows?
The etymology of “to afford” predates modern money as we know it. In early English, it meant “to accomplish or carry out”. Only between the 14th and 16th centuries, during the transition from European feudalism to global capitalism, did it acquire the sense of bearing a cost or having enough to buy something. But the two meanings never fully separated. To afford something is still, at its root, to be able to achieve it.
So, when we ask whether a family can afford groceries, a middle-class life, or the “American Dream,” we’re really asking about their capability to meet basic needs—both today and tomorrow—while still feeling control over a future they cannot see.
That capability has a name: financial health.
We Need the Receipts
For nearly a decade, the Financial Health Network has taken the temperature of household financial health in the U.S. through the annual Financial Health Pulse®. This initiative tracks whether and how families can spend, save, borrow, plan, and protect their finances in ways that let them meet their needs, absorb shocks, and pursue opportunity over time. Our approach is deliberately holistic, looking past income or credit scores alone to see how financial lives hold together—and how changes in financial health outcomes relate to material hardships, disparities across place and population, and long-term security and prosperity.
If affordability is the price of entry to live a good life, then financial health stamps the ticket.
As I’ve thought about the growing national conversation about affordability, I’ve found myself returning to a modest, throwaway artifact: the receipt. The receipt records two things: what you paid, and what you got for it. Affordability, then, is the growing gap between them, driven both by a higher price and by a deterioration in what that money buys—fewer ounces in the bag, thinner insurance coverage, the app that now charges for a version that does half of what it used to do for free.