"Bank Deserts" and Community Financial Health

These days, the concept of "food deserts" -- isolated geographic regions where the population lacks adequate access to healthy, fresh food options -- is familiar to many. As more and more people become aware of the broadening wealth gap in America, so grows the understanding that certain populations without access to consistent and affordable transportation struggle to reach stable jobs and healthy food providers. Instead, they rely on whatever gas station or party store (as they're called here in Michigan) for their food. Research shows that there is a correlation between poverty and obesity in America, and it's not hard to see how that relationship can exist. 

I've come to realize, though, that there are other types of "deserts" that affect these same populations as well. 

First, let's back up a bit. The story of this interest of mine begins when I graduated from college and started working full-time. I was new to the city and new to "the real world" in general; this was the first time I had to worry about paying rent, paying bills, and managing an income and budget. 

As a disclaimer, I fully realize how fortunate I have been in my life. I was raised with parents who didn't want me to worry about money. They urged me to focus on my studies and my extracurricular interests; whatever I needed financially, they worked to provide it, and I will forever be grateful for that. 

However, this pattern of relying on my parents for so long didn't exactly set me up for success when I branched off on my own. With little personal experience managing money, I had to start from square one. I relied heavily on Google searches, personal finance websites, bloggers, and anyone else I could find through the internet that could help me manage the little income I had and set myself up for success. It was with their help that I opened up a savings account and started putting money away every month. And it was because of this guidance that I was able to get through a car break-in and the theft of my computer with little hardship. 

After my car was broken into and I was reminded how important it is to plan ahead for such emergencies, I started thinking more deeply about the state of personal finance education. Where do people go to learn about managing money? I don't know anyone who learned about the basics of savings, investments, or taxes in school. Some of my friends have parents that were far more upfront about these topics than mine were, and others have bankers or financial planners that they rely on for guidance. For privileged people, these resources plus the internet are more than enough to get their bearings.

I started to ask myself: what do people do if there's no bank or knowledgeable person they can turn to?

This is where the idea of a "bank desert" comes in. There is some research that has been done about communities without access to financial institutions, but it's nowhere near as visible an issue as food deserts have become.

I'm interested in digging deeper into this question and seeing if there is a way to quantify the financial health of a community down to the individual level.

My plan involves a few different steps: 

Data compiled by the  Urban Institute .

Data compiled by the Urban Institute.

  1. Zoom in on Detroit. I live in Detroit now, so it makes the most sense to start my investigation on a smaller geographic area than on the state or the nation as a whole.
  2. Determine metrics. I've decided to start by comparing the number and location of brick-and-mortar financial institutions (bank branches, financial/tax planners, etc.) with pay-day loan and check-cashing operations. 
  3. Visualize the problem. I think that mapping the locations of these various types of institutions and businesses would be an interesting exercise. From there, I could focus in more deeply on specific neighborhoods or blocks in the city that demonstrate the problem more clearly. My hypothesis is that areas with fewer banks will have a higher number of pay-day loan and check-cashing places, but counting and mapping this out will help prove that theory.
  4. Survey the community. I would like to do a survey of community members to ask them questions about financial health. Again, I have some theories on how people feel about personal finance, but this would need to be proven by actually asking people what they think. I'd like to know: if they have checking and/or savings accounts; how they feel about banks in general; where they get information about personal finance; if they have access to internet or a computer at home. 
  5. Summarize findings and determine if a solution is needed.

It would be incredibly arrogant of me to assume I know everything about this issue. 

I have theories, but research is needed to better understand and prove the conditions of the problem in this city. With this research completed, I hope that I will have a good understanding of the issues facing some of the low-income populations in the city. Ideally, I will be able to take that data and formulate a plan for how to improve people's lives. In a way, all of this is the prep work for the actual solution I hope to devise and deploy in the future. 

Thumbnail photo provided by my friend, photographer Yvette Van der Velde. Check out her work on Instagram.