Throughout 2023, we made a concerted effort to focus our attention on the relationship Indigenous and Native communities have and have had with financial education and financial well-being. This is a very unexplored area of our country’s shared history, which means it is the perfect topic for an organization like NEFE to unpack.
One example of our work was an in-depth poll of this demographic, asking questions about their own financial well-being and the experiences they have had with the financial services sector. With so much information coming from this work, we wanted to explore how instances of bias and exclusion impact the perceived financial lives of Indigenous individuals.
From our poll, Indigenous people are largely reporting a financial life that is worse than they expected, with much fewer reporting a financial life that is better than they expected. Nearly forty percent (39%) of respondents reported having a worse financial life than they expected, while a similar number of respondents (38%) indicated their financial life was about the same as they expected. Only 17% of Indigenous people reported having a financial life that is better than they expected, while six percent of respondents were unsure about their quality of financial life.
Unfortunately, many Indigenous folks are aware of the financial hardships their families have faced and anticipate similar barriers for themselves. If they are expecting their financial life to be less than optimal, their actual quality of financial life could be quite low despite it being about what they expected. If the bar is low, it does not take much for their financial life to be what they expected. These are communities that face historical marginalization, and with nearly 75% of respondents indicating their financial life is either worse than expected or about what they expected, these marginalizations are having a financial impact that is limiting their ability to flourish. By further exploring the relationship between the types of financial bias these communities have faced and their self-reported quality of financial life, we can hope to draw conclusions on what is affecting these communities most.
Experiences of bias and self-reported quality of financial life
Our analysis yields strong evidence of a relationship between experiencing financial bias and self-reported quality of financial life for Indigenous survey respondents. Those who have experienced bias are 33% more likely to report a financial life that is worse than they expected, compared to those with no experience of bias (controlling for respondent income, gender, race & ethnicity, urbanicity, and home ownership). Those who have not experienced bias are 75% more likely to report a financial life that is better than they expected than respondents who said they had these negative experiences.
Respondents were also asked to select from several housing, employment and financial services related interactions when they felt they had experienced discrimination, bias or unfairness. When analyzing the relationship between these areas and perceived quality of financial life, we found that the experiences that appeared to have the most significant impact were credit, pay, housing, lending, employment opportunity, and insurance.
When given the opportunity to offer additional details on individual experiences of bias, exclusion or unfair treatment, many survey respondents described similar encounters. A number told of being overtly denied access to banking institutions after being called slurs or told, “their kind isn’t welcome here.” Similarly, others described difficulties securing housing or home financing only to have success once these interactions began taking place over the phone during the pandemic.
In addition, our analysis found that, controlling for other factors, respondents who said they had experienced bias were 30% more likely than those who had not experienced bias to “strongly disagree” or “somewhat disagree” that their finances made them feel good most of the time.
Financial Inclusion and Self-Reported Quality of Financial Life
Twenty percent (20%) of survey respondents said that neither they nor anyone in their household had a checking account. The number of unbanked households in Native communities exceeds the amount of unbanked households in the population at large (7% vs. 4.5%). Our analysis suggests that among Indigenous respondents, household income is significantly related to their likelihood of being banked, with those reporting income under $60,000 being 20% less likely to be in a banked household than those with incomes over $60,000. This confirms results from the Federal Deposit Insurance Corporation’s survey of unbanked individuals in the U.S. which highlights that the number one reason identified for remaining outside the formal financial system is too little money.
Survey respondents in unbanked households were much more likely than those in banked households to say that the quality of their financial life was “worse than expected.” Our analysis suggests that, controlling for other factors, unbanked respondents were 23% more likely to say their financial life was worse than expected when compared to banked respondents, and were 78% more likely to choose this response than “about what expected” or “better than expected.”
Whether someone owned their own home or rented also emerged as a significant factor in explaining how respondents viewed the quality of their financial life. A respondent who rented was 32% more likely to say the quality of their financial life was worse than they expected than to say it was about or better than expected. When taking into account banking status, renters who were also unbanked were 20% more likely to report a worse than expected quality of financial life than banked renters.
Measuring Comprehensive Financial Well-Being of Indigenous Communities
Our analysis suggests several specific barriers to financial well-being are affecting Indigenous communities, including both objective financial circumstances and experiences of bias in seeking financial services. The qualitative comments shared with us, some of which we reported here, illustrate the persistent inequality that many in this community experience on a regular basis. However, the factors we were able to consider in analyzing the poll data tell an incomplete story. Statistically, our conclusions explained a very small amount of the variation in reported financial life quality across the different measures that we assessed. Additionally, many of the indicators we might have hypothesized would be related to respondent financial well-being were not statistically associated with individual survey measures or were not resilient to the inclusion of additional controls like income, educational attainment, gender identity, and racial identity. These results should increase our curiosity, as well as our humility, and reinforce our commitment to elevating the voice of Native and Indigenous communities themselves to determine what financial well-being – indeed financial flourishing – looks like, and to ensure that as researchers we are aware of the many limitations of existing scales and measures available in our field.
