Some of the traits that separate affluent households from those that struggle might surprise you. It's not necessarily a high-paying job, an Ivy League college degree or even the best Wall Street advice that distinguishes financial haves from have-nots. It's often more about getting the basics right and making the right connections.

A recent McKinsey & Co. report highlighted five key aspects of financial inclusion, which the consulting company defines as access to services that can help people build wealth. The report focused on African American households, but this checklist could apply to all people seeking to improve their finances.

An ability to make everyday transactions

Millions of Americans don’t have access to basic checking and savings accounts, which is why the McKinsey report underscored the importance of being able to make safe, affordable transactions like depositing paychecks in these and other traditional ways.

Many poorer households rely on check-cashing services that might charge a fee of 3% or so, as well as money orders and high-interest payday loans. Even for people who have checking accounts, low-balance fees can take a toll, as can ATM fees, the report added.

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Part of the banking problem reflects a lack of branches in communities of color, McKinsey argued. However, this could be less of a problem in the future, as branches have been disappearing rapidly anyway and fewer Americans visit their banks in person all that often. Digital finance offers opportunities for getting more people included, but traditional banking services remain important.

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Having access to credit

To some degree, you need to be able to borrow money to make money. This is certainly true of homeownership, which most people can’t afford without a mortgage.

The McKinsey report cited access to credit as critical, noting that car ownership often is more expensive for low-income households, too. The report asserted that Black car buyers often are offered more costly auto loans than white car buyers while being denied loans more often, partly reflecting lower credit scores. Without an auto loan, you might not be able to afford the type of vehicle that can get you readily to a new, better job.

While McKinsey focused on African Americans, other groups also face challenges, including Latinos, rural residents, the LBGTQ+ community and recent immigrants. In fact, Latinos are close to Black households in terms of median wealth, the Census Bureau reported recently, with Asian American household incomes modestly above those of white households.

In general, homeowners report much higher wealth than renters, a median $305,000 per household compared with $4,100, according to the Census Bureau.

Maintaining key types of insurance

Insurance can be critical on the path to financial improvement, not only by guarding against catastrophic losses and expenses but allowing you to qualify to own certain assets. The obvious example again is homeownership. Without the ability to obtain and maintain property insurance, you probably won’t be able to get a mortgage.

The report made special note of health insurance, which affluent households are more likely to have. For example, the median wealth of households where all members have health coverage was $156,600 as of 2019, more than seven times the $21,550 reported for households in which some or all members lack coverage, according to the same census report. Noninsured households also struggle more with medical debts.

Also important are life, disability and other types of coverage. Many of these safeguards are easy to obtain through payroll deductions, assuming a person is offered such options through work.

Being able to save for big goals or rainy days

The McKinsey report highlighted the need to build a cushion of assets that can be used for anything from paying unexpected bills to saving for retirement. But millions of Americans have no such cushion. Only 48% of adults surveyed recently by Bankrate.com said they have enough emergency savings to cover three months or more of expenses. 

Credit cards now carry average interest rates above 20%, and Americans collectively hold more than $1 trillion in card balances. This largely reflects the inability of people to set aside money in liquid savings accounts.

Successful saving is all about developing the habit over time, said Greg McBride, Bankrate's chief financial analyst. He suggests getting started by making regular contributions, such as through direct deposit from your paycheck, into an online savings account.

The ability to accumulate long-term wealth

If you spend all of the income you earn, you won't accumulate any wealth. The goal for everyone should be setting aside at least a little money from each paycheck and directing it into a savings or investment account. From there, you can start thinking bigger.

Homeownership is a key step, as residential properties provide shelter and typically increase in value over time. But the list of other wealth-building vehicles includes stocks, bonds, mutual funds, retirement plans, and rental properties.

Accumulating wealth can have an intergenerational impact that's often overlooked. For example, only 8% of Black families leave inheritances to their children, compared with 26% of white families, according to McKinsey. Overall, Black families have accumulated about 24% of the wealth of white households and Latinos are at 23%, according to the Federal Reserve Bank of St. Louis.

In addition to the dollars involved, older family members who achieve investment success can serve as role models, instilling in younger generations the skills and attitudes that tip the scales in their favor.

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