Financial Health

What is Financial Security & Universal Basic Income (UBI)

In recent years, the realities of financial insecurity have confronted more American families than ever. COVID-19 was just the beginning; the following lockdowns and inflation only worsened the financial situation for millions around the country.

Thankfully, the worst of the pandemic is behind us, but we have our work cut out for us in the form of financial security missions. Families need better ways to earn, save, manage enough money to set themselves up for a future with greater protections and peace of mind against crises.

Achieving financial security on a broad scale doesn’t happen overnight, which is why mission-driven companies like Steady have stepped up to move the process forward in real ways. 

This action plan includes advocating for programs like Universal Basic Income, making it a more popular and politically viable idea. 

Let’s explore how UBI and financial security go hand in hand and what we can do to introduce a new era of financial well-being in the U.S. and beyond.

What Is UBI (In Simple Terms)?

Basic income simply refers to a direct cash payment from the government to its citizens, implemented to help people meet financial needs and combat poverty. Universal basic income takes things to the next level by including everyone in society, not only those with substantial net worths.

While some basic income policies are regional or require a mean test to receive, this unconditional feature makes UBI different from the standard social welfare programs that already exist in many countries worldwide.

This broad definition leaves much room for the exact details of a UBI plan, with many variables to adjust. Governments must determine how to fund UBI programs, how much money would be sent out, the frequency of those payments, the duration of the program, and how this would impact other financial safety net systems in place.

Many different perspectives and arguments have been made in favor of UBI and against it, as the idea includes dimensions of economics, politics, sociology, artificial intelligence, automation, and more.

Examples of Universal Basic Income

UBI has not yet been implemented in the pure sense, but several basic income programs have been successfully launched and maintained over the past hundred years.

  • The Alaska Permanent Fund, which has been giving out payments since 1982, is the best-known program in the United States, drawing from the state’s oil and gas revenues. Other pilot programs in cities throughout the U.S. have tried to increase citizens' financial security, with varying durations and cash amounts.
  • Scandinavian countries like Norway and Finland, often viewed as the model for state-assisted financial security, have introduced similar programs. However, these programs are not true UBI examples since they include conditions like seeking work and avoiding legal trouble.
  • In Brazil, the famous Bolsa Familia (family allowance) program paved the way for government assistance programs in the modern era, covering nearly 14 million families, or 26% of the Brazilian population, with a monthly payment. The program ended in 2021 but showed that such initiatives are viable and effective in generating financial security at scale. 

Universal Basic Income Pros and Cons

UBI has fierce proponents and critics as a potentially transformative social and political policy. Here are the pros and cons of UBI and what you should know to develop your views.

What Are the Pros of UBI?

The first and most powerful benefit of UBI would be the poverty alleviation that such a program would provide, a point that has been supported in the many small-scale trials.

The idea is simple enough: more money in the pockets of everyday people will mean greater financial security and fewer concerns about housing, food, transportation, and the other necessities that provide material well-being. Of course, financial security means having an emergency fund, too.

Still, paying the bills is just the first-glance benefit of UBI, and advocates point to many knock-on effects that would result from the program. That extra financial security could lead to more productive and meaningful work, happier family life for children, increased engagement with local communities, better physical and mental health outcomes, reduced crime rates, and much more.

One particular example is the reduced need to save for retirement. Currently, retirement income comprises of programs like social security, often supplemented by retirement accounts or retirement plans like a Roth IRA — retirement savings tied to the stock market. 

While UBI would not hinder people from having long-term goals of building wealth, it would guarantee that every retired person has enough income to cover monthly expenses. Instead of stressing about your savings rate for retirement, UBI programs allow you to prioritize your current financial stability and living expenses because your future is secure.

In a broader view, these shifts may result in a long-term narrowing of wealth gaps in the United States between rich and poor, allowing for a more equitable and fair society to emerge.

What Are the Cons of UBI?

The main critique of UBI is its practicality, most notably, the high cost it would take to implement a true UBI program. Estimates range from the multi-billions to the trillions of dollars - money that even the wealthy United States government doesn’t currently have to spare.

In addition, the economic and social effects of UBI have been a target for critics as support has risen. By receiving “free money,” certain individuals may be less incentivized to work or take their careers to the next level out of necessity.

The fear is that this dynamic would lead to an economic slowdown as people become too comfortable with payments and spend less time in the workforce. 

Lastly, there are moral concerns about giving payments out to criminals and individuals who seem incompatible with society.

Which Countries Have Universal Basic Income?

We can point to Scandanavian countries as the pinnacle of social safety nets and structures that incentivize people to advance economically in a humane, reasonable way. Even as the United States makes progress with programs like Medicare, Social Security, and SNAP (food stamp benefits), there is still a long way to go.

Going by the strict definition of universal basic income (unconditional, ongoing, and widespread), it would be inaccurate to say that any country has a real UBI plan in place.

Even the prior attempts at UBI would not be considered complete by these standards, suggesting that an authentic initiative has not yet been tried.

Rather than viewing UBI as a distant ideal that can’t be reached, look at it as the next logical step towards a more financially secure and compassionate society.

Universal Basic Income in the United States

We don’t yet have UBI in the United States, but numerous financial safety systems can help people in need. It’s not just publicly funded; mission-driven companies like Steady have delivered millions in financial assistance to families through the years to show what’s possible.

Who Qualifies for UBI?

Everyone in the United States would qualify for a true UBI program. Instead, we have means-tested benefits that can only be received by meeting certain conditions, whether it’s a disability, dependents (children or the elderly), living below the poverty line, or otherwise.

Does UBI Replace Social Security?

For UBI to gain support and see implementation, there would likely need to be adjustments to the current budget plan in terms of social spending. Some advocate that Social Security benefits be pared down, while others suggest budget cuts in Medicare, education, or elsewhere.

This is the ongoing conversation in American politics that won’t see a conclusion soon. However, a genuine UBI solution may be on the horizon with greater public consensus and a willingness to compromise.

When Will UBI in the United States Start?

With presidential candidates like Andrew Yang and others advocating for UBI in recent years, the idea is more mainstream than ever. We may still be years away from making UBI a reality, but interest in the concept is certainly at all-time highs.

In the meantime, trailblazers like Steady and our partners are working to bring the next best thing to the public: income-boosting rewards and pathways to improved personal finance practices.

Cash can only take you so far. Our goal is to change how people view and manage money so that they can rise above poverty in a lasting, sustainable way.

How to Apply for Universal Basic Income in the US

The process will likely require an application and connection via direct deposit with your bank if UBI is finally implemented. Whether this will impact other social benefits payments is yet to be seen, and every individual outcome will vary.

However, if UBI lives up to its name, these payments will be universal, unconditional, and arrive simultaneously each cycle to ensure recipients stay on top of their finances.

What To Do Next

Just a decade ago, the idea of UBI was still on the fringes of politics and economics. But things change fast in the modern world, and an increasingly engaged population is looking for a change.

We may not see UBI for many more years, if ever, but we can learn some valuable lessons from our findings here. Financial security is a top priority on an individual and community level, and it’s a mission worth fighting for on every front.

Regardless of your financial journey, see how Steady can help you get organized, plan ahead, and earn some much-needed cash as you navigate these challenging times. 


What is UBI and How Would It Work | Smart Asset

Social Security for All | The American Prospect

Pros and Cons of Universal Basic Income | UNC