Imagine earning a decent salary but having no savings, no home equity, and no safety net. This is the reality for millions of Americans struggling to achieve economic security.
Today, achieving upward mobility doesn’t require just making a steady income but also accumulating wealth, which helps people plan for the future and pay for current unexpected expenses.
Yet too often, policies intended to help more Americans become financially secure focus on increasing either income or wealth—not both. As more households feel the pain of increasing costs and struggle to purchase a home or generate wealth through other means, local leaders aiming to help residents achieve upward mobility should create opportunities for residents to build both wealth and income.
What’s the difference between income and wealth?
Income is the money people earn primarily through employment. It also includes payments from pensions, capital gains, and Social Security. Most people use their income to pay for living expenses.
However, more than half of people in the US (52 percent) can’t cover their monthly expenses. That’s according to the Urban Institute’s true cost of economic security measure, which considers whether people’s monthly income and other resources, such as benefits from government assistance, interest, and dividends, can cover their housing, health care, food, transportation, and child care costs.
Based on this analysis, 58 percent of families with children don’t have enough income and resources to cover their monthly costs.
By contrast, wealth is the money people use to pay for unexpected expenses and invest in assets that lead to opportunity. It’s emergency and retirement savings, equity from real estate or business investments, and for some, transfers from family members. Wealth inequality in the US is vast and well documented: In 2022, the wealthiest families had 71 times the wealth of those in the middle.
White families had six times the average wealth of Black families and Hispanic families.
Like income, a lack of wealth affects people’s everyday lives. In 2022, only about half (51 percent), of families had savings equivalent to one month of income that they could easily access and spend.
Why families need both income and wealth to achieve upward mobility
Policy solutions that focus on helping families increase their income without considering the importance of wealth will likely help people survive but not thrive. In other words, savings are just as important as income. Low-income families with savings of $2,000 to $4,999 are more financially resilient than middle-income families without savings.
Policies that strive to help people build wealth but don’t consider income are also insufficient. At a time when household economic distress is growing more acute, ignoring people’s immediate, everyday needs will likely not set them on a path to upward mobility.
Families with as little as $250 to $749 in savings are less likely to be evicted, miss a housing or utility payment, or receive public benefits after a job loss, health issue, or large income drop. Urban research shows these events can cost cities tens to hundreds of millions of dollars, suggesting that city and other local leaders have an economic interest in improving their residents’ financial health (link updated 9/18/2025).
How can local leaders help families grow both their income and wealth?
To build comprehensive, financial well-being policies that help residents thrive, local leaders can use the following policy tools and strategies:
- Budget and allocate funds needed to expand income supports and wealth-building initiatives. Urban research shows how Washington, DC, council members used the standard appropriations and budgeting processes to expand the earned income tax credit (EITC) and fund baby bonds. This combined focus on income and wealth helped families meet their basic needs via the EITC while setting their children up for future financial security via baby bonds.
- Ensure local government agencies tasked with resident financial well-being are supporting residents’ income and wealth. The City of Lansing’s Office of Financial Empowerment launched the Financial Empowerment Center, which provides residents with free one-on-one financial counseling that incorporates coaching on building wealth. This includes creating personal budgets, saving money for the future, and developing strategies to pay down debt.
- Identify partners focused on financial well-being and leverage their expertise. In 2019, the Boston Housing Authority launched a partnership with Compass Working Capital to expand access to the US Department of Housing and Urban Development’s Financial Self-Sufficiency (FSS) program, which helps residents of subsidized housing build assets. Through the partnership, Compass’s financial coaches took on several of the responsibilities of FSS coordinators, including providing financial coaching, building relationships with residents, and assisting with enrollment in the FSS program. Evaluations found that this and similar programs have yielded net benefits to participants (PDF), including increased credit scores and reduced debt (PDF).
- Work with local partners from private and nonprofit sectors to create innovative pathways to build equity. Buying a home isn’t the only way residents can build wealth. In 2017, the nonprofit aid organization Mercy Corps led the creation of the first Community Investment Trust (CIT) in Portland, Oregon. The East Portland CIT Corporation allows residents in four zip codes to purchase low-cost, loss-protected shares in Plaza 122, a commercial property in East Portland. Shares are loss protected (PDF) via a direct pay letter of credit from a bank to shield low-income investors from risk.
Let’s build a future where everyone, everywhere has the opportunity and power to thrive
Urban is more determined than ever to partner with changemakers to unlock opportunities that give people across the country a fair shot at reaching their fullest potential. Invest in Urban to power this type of work.
