A new study by Rice University has revealed some troubling results. A majority of Houston-area residents are living paycheck to paycheck, with only one-third relying on their savings to cover three months of expenses.
Rice University’s Kinder Institute for Urban Research surveyed more than 5,500 Harris County residents in late 2023. The study found that while 64% of respondents reported engaging in regular savings habits—such as setting aside a fixed amount or saving leftover funds—only one-third of these savers could sustain themselves for three months or longer using savings alone.
Recommended Videos
Dan Potter, director of the Kinder Institute’s Houston Population Research Center and a lead author of the report, said the findings underscore the fragile financial reality faced by many in the Houston area.
“Financial security is a critical determinant of health, education and overall well-being, yet the research highlights a substantial gap in residents’ ability to build the safety net required for resilience and prosperity,” Potter said.
He also emphasized the disproportionate challenges faced by certain demographic groups.
“More than 40% of Houston-area residents cannot cover a $400 emergency expense, and these numbers are even higher for Hispanic and Black residents. Our research underscores the urgency of creating programs that not only encourage saving but also address systemic barriers to financial security,” Potter added.
The study identified several obstacles preventing residents from saving enough to achieve financial stability. Emergencies were the most commonly cited reason (80%), followed by high housing costs (76%), medical expenses (63%) and credit card debt (61%). Nonessential spending, such as dining out and vacations, was also reported as a challenge by 63% of respondents.
The research revealed that residents who adopted a savings habit were more likely to achieve financial stability, regardless of income level. However, budgeting alone was not enough to secure long-term financial resilience without a dedicated savings plan.
“Policymakers, nonprofits and community organizations can play a pivotal role in increasing financial education and providing resources to overcome the barriers identified in this study,” Potter said.
The study’s authors, including co-researchers Joy Njeh and Aaron Niznik, call for tailored interventions to help residents build savings and address financial insecurity. These interventions, they suggest, should take into account the unique circumstances of different households.
Potter emphasized the importance of addressing these challenges collectively.
“The ability to save and achieve financial security is vital not just for individual households but for the overall resilience and prosperity of the Houston community,” he said.
READ MORE: