Association for Public Policy Analysis & Management

Single mothers, perhaps more than another other family type, struggle with income and wealth inequality (Casey, 2011; Goldberg, 2014), and experience higher rates of economic shocks than other groups (Acs, Loprest, & Nichols; Bollinger & Ziliak, 2007). In the event of an unforeseen economic shock, liquid asset holdings can be an important protective factor to help these families avoid future financial hardship (Mills & Amick, 2010; Gjertson, 2014). Yet, it is unclear what level of liquid asset holdings are adequate for a given household, as most national data sets assess adequacy differently. Some operationalize the concept as financial fragility, where a household is considered financially fragile if they are uncertain with their ability to come up with $2,000 in 30 days (FINRA, 2013; Lusardi, Schneider, & Tufano, 2011). Others have measured adequate liquid asset holdings as equitable to either emergency savings equal to two or three months of income or expenses (CFED, 2014; CFED, 2015; Gjertson, 2014). This inconsistency makes it difficult to discern if single mothers are disproportionally represented among those who lack sufficient liquid assets to weather an economic shock. The purpose of this paper is to compare the prevalence of financial fragility and amount emergency savings held by single mothers to other household types using two national data sets. 

 This study used Wave 9 of the Fragile Families and Child Wellbeing Study (FFCWS) and the 2012 National Financial Capability Study (FFCWS). A subsample of respondents reporting children in their household was taken from each data set. The two subsamples were divided into three household types: single mothers (NFCS=1,457; FFCWS=2,563), married or cohabiting couples with children (NFCS=4,162; FFCWS=700), and single fathers (NFCS=724; FFCWS=176).  

Households headed by single mothers more frequently reported higher rates of financial fragility and lower rates of emergency savings when compared to households headed by single fathers and cohabiting or married couples. Over three-quarters of single mothers did not have savings equal to three months of expenses, compared to 60% of single fathers and 64% of couples with children. When asked about savings equal to two months income, again, 78% of single mothers reported they did not have this amount of savings, compared to 77% of single fathers and 57% of couples.  Similarly, 66% of single mothers reported that they were uncertain of their ability to come up with $2,000 in 30 days, compared to 41% of single fathers and 48% of couples with children.

Single mothers appear to struggle with inadequate liquid assets more than other household types. While the majority of respondents in both data sets did not have cash on hand in the form of personal savings, single mothers, as well as other heads of household, reported more confidence in their ability to come up a $2,000 in 30 days. Taken together, these findings indicate that households conceptualize their ability to weather an unexpected emergency more positively when the opportunity to draw upon multiple resources, perhaps friends and family, an alternative financial service, or personal savings, is possible.