Many programs and policies supporting financial well-being for consumers rightly prioritize long-term security. However, short-term financial stability provides the foundation from which financial security, and eventually economic mobility for the next generation, is built. 
This report shines a light on the central role that short-term financial stability plays in a person’s ability to reach broader financial security and upward economic mobility, a measurement of whether an individual moves up the economic ladder over one’s lifetime or across generations. Short-term financial stability means having enough of a financial cushion, broadly defined, to cope with everyday financial shocks, while still progressing towards financial goals.
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In this report we focus on four types of financial cushions:
- Routinely positive cash flow (income that exceeds expenses)
- Liquid savings (such as cash and money held in checking and savings accounts)
- Access to high-quality credit
- Strong social networks
While it’s intuitively clear that the availability of such resources can prevent immediate material hardship, it may be less broadly understood that short-term cushions are also key to longer-term financial security and well-being. Stability promotes security because financial buffers protect consumers from shocks that would detract from progress toward their long-term goals, act as material foundations for growing assets, and reinforce the financial actions that move people towards broader well-being.
The insights presented in this report draw primarily on evidence provided by members of the Consumer Insights Collaborative (CIC), a group of nine leading nonprofits across the United States convened by the Aspen Institute Financial Security Program. These diverse organizations offer a window into the financial lives of the low- and moderate-income individuals they serve. Together, their data highlight barriers to financial stability, the strategies that consumers use to boost short-term stability on their own, as well as the external supports that CIC members, through their front-line work, know can increase the success of consumers’ own efforts.
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