Generational Wealth and Financial Inclusion: Why it Matters for Families and Communities

THERE CAN BE MANY OBSTACLES that pose a challenge for people seeking to achieve financial stability and security. There are an estimated 24.6 million American adults that are either unbanked or underbanked. 

April is Financial Literacy Month and Equifax is passionate about both driving financial inclusion and providing people with the educational tools needed for greater credit awareness. 

[LEARN MORE: Equifax’s Commitment to Financial Inclusion]

Access to credit, savings and other affordable mainstream financial services tools and products can provide individuals with a greater sense of financial security, flexibility, and stability. That stable foundation can help people focus on achieving their life goals, enabling them to invest in education, a small business and/or a home. A strong financial foundation can also free up capital to save or invest elsewhere, helping to build personal equity and savings over time.

The question of “why” a person may not have access to mainstream financial services products comes with several answers. The global financial ecosystem is complex. Obstacles can vary based on global geography, personal life stage and other factors – but some of the most common reasons include:

• Unbanked: individuals who do not have a traditional bank account due to lack of access, unemployment, inability to meet minimum balance requirements, or a lack of steady income
   

• Underbanked: people who have reduced access to mainstream financial services, may have alternative financial preferences such as Buy Now, Pay Later, may be a gig-worker or may have non-traditional employment
   

• Credit-recovering: those who may have filed bankruptcy, had credit accounts moved into collections, or who have undergone significant life events such as a divorce
   

• Credit Averse: individuals who lack trust in financial institutions, live in a country with limited government oversight or may experience financial security issues

Generational Wealth

When individuals have access to affordable banking services, credit and other financial tools, they are better equipped to save, invest and grow their wealth for future generations.

Generational wealth is essentially any kind of asset that is passed down from one generation to the next. It’s projected that more than $80 trillion will be passed down from today’s older generations to their children and other heirs over the next two decades. 

The impact of generational wealth on people can be significant, providing financial stability, access to education, business ownership and social mobility.  

We spoke to several people in Atlanta about what it means for them.

“It means access to, not just equal, but equitable, convenient and affordable financial services,” one Atlanta resident said.

“Generational wealth looks like for me that I’m passing on a future to my great-grandchildren, grandchildren, where they can start building their lives a little bit more secure than me,” another resident said. 

One resident described how generational wealth doesn’t always have to be about money alone. It can be something else that contributes to the financial health of families. 

“If your mom gave you a car so you don’t have to buy it, just that alone is generational wealth. It doesn’t mean your parents are rich, it’s anything you got from the generation before you,” another Atlanta resident said.

A single financial opportunity can be an important step to establishing individual financial health and generational wealth that can change the trajectory and livelihood of families and communities for generations. It creates a sense of family legacy and history that can be a source of pride and resilience.

 

Community Support 

Driving financial inclusion starts by supporting the communities where we live and work. As part of our purpose to help people live their financial best, the Equifax Foundation works with community organizations to support greater access to credit, credit-building, access to capital, and wealth-building efforts.

One such organization that the Equifax Foundation supports is On The Rise Community Development Center, an Atlanta community-based organization whose mission is to help people build financial well-being and wealth by partnering with coaching or counseling.

On The Rise’s vision is to build financial security for the residents of Atlanta’s west side communities through quality counseling and coaching, access to affordable products and services, as well as alignment with collaborative partnerships to enable a vibrant and sustainable community.

Read more about our commitment to financial inclusion HERE.