When Savings Fall Short

A new report from Rice Business highlights local budgeting, saving and financial security trends.

Hand trying to grasp hundred dollar bills

Spring 2025
By Amy McCaig

Could your household budget withstand an economic shock, such as job loss or unexpected expenses? A report from Rice’s Kinder Institute for Urban Research and the United Way of Greater Houston finds that two-thirds of Houston-area residents are unable to cover three months of living expenses using savings alone, underscoring significant financial vulnerability within the region. The study is based on data collected from more than 5,500 Harris County residents in late 2023.  

“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,” says Dan Potter, director of the Kinder Institute’s Houston Population Research Center and one of the authors of the report. 

 

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.

 


“No matter how much a person earns, they can always have a budget because it will benefit them, even if it doesn’t lead directly to financial security,” says Jessica Davison, senior director of mission and strategy at United Way of Greater Houston. 

The researchers write that saving increases the likelihood of residents being financially secure. Both people who saved regularly or put aside what was left over were more likely to be financially secure than those who did neither. Budgeting on its own was not related to being financially secure.

“Our research underscores the urgency of creating programs that not only encourage saving but also address systemic barriers to financial security,” Potter says. Kinder Institute researchers Joy Njeh and Aaron Niznik are co-authors of the report.

 
Key Findings
  
34% 

of Harris County residents are financially secure, meaning they are able to cover living expenses using only their savings for three months or more.
30% 

of residents are considered financially vulnerable, lacking savings to cover just two weeks’ worth of expenses.
31% 

of Houston-area residents saved money by setting aside a regular amount each month.
33% 

of residents saved money by setting aside what was left. Barriers to saving include paying emergency expenses such as home or car repairs, housing costs, health care expenses and credit card debt.
64% 

of Houston-area residents save money each month.
64% 

of residents use either a formal or informal budget. For residents not using a budget, the most common barrier is the belief that they do not earn enough to justify keeping a budget.

Data for this study came from the Greater Houston Community Panel, a project following adults living in Harris County, Texas, to learn more about their experiences, values and preferences. Read the full report at kinder.rice.edu/dollarsandcents.