The New American Dream: Predictable Cash Flow

This week I had a chance to attend an event, “Financial Diaries: Building Financial Resilience in the Bay Area” at the Federal Reserve Bank of San Francisco. The event brought together a panel to discuss the results from the financial diaries of 235 low- and middle-income families in the U.S. which was recently published in the book, “The Financial Diaries.” The co-authors Johnathan Morduch and Rachel Schneider each spoke about the conclusions from the book and participated on the panel.


I’ve been deeply interested in Microfinance since Muhammad Yunus won the Nobel Peace Prize in 2006. I’ve been following the progression of Microfinance into the broader concept of financial inclusion. In 2009 I read “Portfolios of the Poor” which used financial diaries to understand how the poor in Bangladesh, India, and South Africa live on $2 a day on average. Since about that same time, I’ve followed the work of the Center for Financial Services Innovation (CFSI) out of Chicago. I was thrilled to see the collaboration of Jonathan Morduch who was one of the authors of “Portfolios of the Poor” and Rachel Schneider of CFSI in this new book.

The primary insight that resonated with me is the desire for predictable cash flows. The families from the study experienced 50% swings in income on a week to week basis. What these families truly want more than a white picket fence or promise for upward mobility is the ability to pay their bills and plan for their future. Even the households with some financial stability experienced variability when they were called upon to financially help out friends or family members in need.

This feels like the most important problem to solve first. It’s refreshing to see this problem so clearly defined from the rigorous data collection and analysis. Don’t get me wrong, there are many different facets and problems to solve in the area of poverty alleviation across the world. But identifying the predictable cash flow issue as a prominent and common concern will allow individuals and organizations who care about this issue to come together and start developing solutions.

What innovations in banking, technology, and/or policy can be applied that will lead to predictable cash flows to improve the lives of low- to middle-income families?

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