Our Framework

Prioritizing
People have extensive needs and virtually unlimited aspirations. Whether deliberately or not, they prioritize the use of their limited financial resources to strike a balance between the two. Financial priorities evolve as social, economic, and financial realities change. Financial stress often overwhelms people, hindering their ability to set and pursue clear priorities. In such circumstances they may focus only on their most urgent needs. 

Planning

Most people plan their finances. Whether their plan spans one day, one week, or one year, they deliberately shape income, build reserves, and cultivate receivables to achieve their priorities. They utilize a variety of strategies, with varying levels of complexity and concreteness, and employ a wide range of financial instruments. Long-term planning can improve their ability to achieve financial priorities, increase resilience, and reduce financial stress. Financial stress often inhibits planning capacity and limits attention to the most urgent needs.

Shaping Income
People shape income to better meet needs and aspirations. They work to determine the size and timing of earnings and to improve income reliability in a manner that best covers expenses. 

Shaping Expenses

People similarly shape expenses to better meet needs and aspirations. They try to control the size and timing of expenses to better match expected income. Many low-income families run small businesses and manage both household and business expenses together.  

Building Reserves

Reserves consist of a person's net wealth (including all assets), available labor potential, and social capital. People build reserves by storing value in a manner that balances their unique needs for financial liquidity, security, and returns. Those who establish foundational reserves are better positioned to effectively manage their finances, pursue aspirations, and deal with the unexpected. Establishing a foundational reserve often transforms a person’s financial life by instilling self-confidence and offering new possibilities, tools, and strategies with which to work.

Cultivating Receivables

Receivables are the financial resources a person can obtain but does not currently hold. This includes both formal and informal credit as well as social contributions from their community in times of need. People cultivate receivables by growing and securing income, building reserves to establish formal and informal credit, and making investments in the social safety net afforded by their network. The social safety net pools risk and provides people limited support in select times of acute need. Its strength relates to a person’s social status and the size and quality of their social network.