The Financial Diaries

FinancialThe Financial Diaries by Jonathan Morduch and Rachel Schneider details the results of a groundbreaking study they conducted of 235 low- and middle-income families over the course of one year. What they found is that the conventional life-cycle method of approaching finances, wherein a family saves steadily to prepare for eventual retirement, is unrealistic for many. This book combines hard facts with the personal stories of people struggling to make ends meet, even in a time when America is experiencing unprecedented prosperity. You’ll meet a street vendor, a tax preparer, and many more as Schneider and Morduch challenge popular assumptions about how Americans earn, spend, borrow, and save. Read on to learn more about the everyday challenges of a casino dealer from central Mississippi.

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Janice Evans has worked at the Pearl River Resort— a family-friendly destination on the Choctaw reservation in central Mississippi with water slides, a spa, two golf courses, a steakhouse, and a casino—for close to twenty years, since she was in her mid-thirties. She works the night shift, starting at 8am and finishing up at 4am. As a single, African American mother with a high school degree, she makes $8.35 per hour, but in a good week she can double that in tips. Customers can put chips in her “toke box,” and at the end of each shift they are collected and counted; the equivalent amount in dollars is then added to Janice’s next paycheck. She does well during the summer months, but fall is much slower. Her income also rises and falls based on where the local college football team is playing that year—when they play near Pearl River people often come to the casino after a game, and when they don’t the casino does not get that business. Over the course of the year Janice makes just over $26,000, or an average of about $2,200 a month. However, due to the fluctuating income from tips, her actual take home pay each month can vary from around $1,800 to approximately $2,400. That represents a 30% deviation between paychecks. Just before the study began, Janice’s son Marcus was laid off from his maintenance job when his employer lost a contract; as a result, he and his three-year-old daughter moved in with Janice. Since he no longer had an income, he qualified for food stamps, an average of $125/month, but this income was unsteady as well: at one point the local social services agency mistook Janice’s income for Marcus’s and canceled his food stamps. It took two months to get them back. And while he also qualified for unemployment benefits, several months passed before the first check arrived. Altogether, the benefits boosted the household’s net income to $33,000, but with the increased funds came increased inconsistency. Whereas before Janice’s income swung 30%, it now swung 70% from high to low months. Given the nature of Janice’s work in a seasonal, low-skill, tipped job and the unreliability of Marcus’s benefits, you might assume that her family’s income would be among the most erratic of the 235 households studied in the U.S. Financial Diaries. In fact, it’s not—the degree of inconsistency in Janice’s household was on par with most families that the authors got to know throughout the course of their study. Morduch and Schneider’s study of families who struggle with income volatility revealed new insights into how Americans make money, borrow, spend, and save.

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To learn more, pick up a copy of The Financial Diaries by Jonathan Morduch and Rachel Schneider.