It is one of a parent’s worst nightmares- you lose your job or there is a medical emergency and before you know it, you are unable to support your family.

The Corporation for Enterprise Development (CFED)’s 2012 Assets and Opportunity Scorecard reveals that too many families are dangerously close to this nightmare scenario.

The most recent Census data reported that 15.1% of individuals and 22% of children are living in poverty, what CFED’s report reveals is how many households are on the brink of falling into this category. 27% of households are living in “asset poverty,” meaning they do not have adequate savings or assets to cover a three-month period of basic expenses. In addition, 43% of households are living in “liquid asset poverty,” meaning that they don’t own any assets that can be easily sold for cash- such as a car.

Having so little financial stability means that these families are not only unable to weather layoffs, medical emergencies, or other crises that might come their way, but they are also unable to plan and save for the future.

So what does this mean for the children of these families?

When parents are stressed over finances, that stress can have a significant effect on their children’s well-being and cause their children to be stressed in return. According to the American Psychological Association’s 2010 Stress in America survey, 70% of parents surveyed reported that they feel their stress has little impact on their children, but one-third of children ages 10-12 and over 40% of teens reported that they feel worried when they see their parents stressed, and an even higher percentage reported that they feel sad when they see their parents stressed. This can impact academic achievement, as well as potentially result in a wide range of negative psychological effects, including behavioral and emotional problems such as aggression, anxiety, or depression. It also jeopardizes decisions about children’s futures, including the pursuit of higher education. For those young people fortunate enough to attend college, 65% graduate with debt, and the average graduating college senior exits with an average debt of $25, 250.

So what can we do to help families stay afloat and establish financial stability for themselves and their children?
One way is to help families save specifically for their children’s future. According to the Child Savings Account Coalition, of which First Focus is a member, even a few thousand dollars of assets can give a child a sense of economic security and the confidence that they have the potential for a brighter future.

The Coalition notes that for less than 1% of what the Federal government spends annually to subsidize the college educations, homes, retirement savings and businesses of the wealthiest 20% of Americans, we could invest $500 in a Child Savings Account (CSAs) for every newborn in the US, regardless of income, to help build their financial future. This not a new idea − Mexico, Korea, and Singapore have already established Child Savings Accounts, and in Maine, newborns can receive a college savings account at birth with an initial deposit of $500.

Another approach is to ensure that existing policies do not penalize families for building assets. Currently, asset limits exist for many means-tested public programs, but vary considerably by program and by state – resulting in confusion for families during the application process and potentially hindering them from building a modest amount of savings or owning a car to get to work. Establishing a uniform asset limit across all federally-funded means-tested programs that serve low-income families, such as Temporary Assistance for Needy Families (TANF) or the Supplemental Nutrition Assistance Program (SNAP), would encourage and better enable low-income families to save money for their family’s future.

Too many families are living on the brink of poverty. We need to help these families stay afloat so more children can have the chance for a happier childhood and a brighter future.