Now in its second year, this year-over-year analysis of peoples’ financial health found that despite a strong economy, only 29% of people in the U.S. are financially healthy. As signs of a looming economic downturn increase, this indicates that the majority of Americans are still unprepared for short or long-term financial shocks.
While the overall financial health of Americans remained static from last year, the report provides a unique view of individual households’ financial situations that showed significant shifts. Some of the most compelling data show significant swings in the financial health of individuals, with more than half (50.6%) of Americans experiencing a significant change in their financial health over the course of a year.
Shifts can partly be attributed to fluid factors such as employment status and changes in physical health. Other data shows that changes occurred within specific indicators of financial health and among certain demographic groups including women, middle-income people, and those in their prime working years. Key findings from the report include:
People are saving less, with 12% of respondents saying that they have less than 1 week of living expenses saved in 2019, up 1.4 percentage points from 2018. More than half (55%) of people aged 26-49 say they do not have enough savings to cover three months of living expenses in 2019, an increase of 4.8 points
People are less confident in the sufficiency of their insurance coverage, with the percentage of people who say they are confident they have sufficient insurance coverage to recover from an emergency declining 3.2 points to 58.2% in 2019. Related, the percentage of people who say they have no insurance of any kind increased 1.4 points, to a total of 4%.
Women are experiencing significant shifts in stability and stress, with 51.2% saying they do not have enough liquid savings to cover three months of living expenses in 2019, an increase of 2.6 points, and 20.1% of women saying their finances cause them a high amount of stress, compared to 13.2% of men.
For some, the rate of spending is outpacing income with nearly 20% (19.7%) of people with household income from $30,000 to $59,999 saying they spent more than their income in the 12 months prior to the 2019 survey, an increase of 4.1 points. People with household income from $60,000 to $99,999 experienced a similar increase from 2018 to 2019, of 3.9 points.
There are also some notable bright spots within the 2019 data, including that people with household incomes less than $30,000 are reporting a better ability to pay their bills on time and manage their debt, up 5.3 and 4.9 points respectively.
“Financial health is fluid. Measuring year-to-year change can give us perspective on what types of factors influence financial health over time, while seeing nuanced data can give us critical insight into how people are faring beyond the aggregate,” said Jennifer Tescher, founder and CEO of the Financial Health Network. “Identifying areas where Americans are struggling can help stakeholders such as policymakers, employers and insurers hone in on ways to help these groups create more financial resilience.”
Now in its second year, the annual Pulse report scores survey respondents against eight indicators of financial health -- spending, bill payment, short-term and long-term savings, debt load, credit score, insurance coverage, and planning -- to assess whether they are “financially healthy,” “financially coping,” or “financially vulnerable”. The data in the Pulse report provide critical insights that go beyond aggregate economic indicators, such as employment and market performance, to provide a more accurate picture of the financial lives of people in the U.S.
“Understanding the financial ups and downs at the household level is an invaluable tool to design approaches that matter,” said Tilman Ehrbeck, managing partner at Flourish, a venture of The Omidyar Group. “For us, as a fintech investor backing entrepreneurs committed to building a fair financial system and driving financial health, the Pulse has quickly become a must-have source. It helps our portfolio companies devise strategies and service offerings that can really move the needle on specific challenges their customers are facing.”
The year-over-year report is designed to give financial services providers, innovators, policymakers and researchers actionable insights and data on the financial lives of people in America that can serve as a blueprint for measuring opportunity and impact over time.
Tim Ring, senior vice president and MetLife’s chief sustainability officer, stated, “MetLife Foundation is proud to support the Pulse study and be a key partner of the Financial Health Network. Financial health is not only the focus of our Foundation, it is a key part of MetLife’s commitment to sustainability. It’s important that we bring to bear our best tools — thought leadership, philanthropic partnerships and grants, and protection products and services — to positively impact the financial lives of American families.”
In addition to looking beyond aggregate indicators, the survey enables reporting on specific demographics with unique financial health challenges who often require customized analysis and innovation, such as older Americans and those in specific geographies.
“Insights from the US Financial Pulse can help us develop better solutions for the money challenges people face throughout their lives,” said Debra Whitman, executive vice president and chief public policy officer, AARP. “For instance, AARP’s analysis of the Pulse finds that people with an emergency savings account are two and a half times more likely to be confident in reaching their long-term financial goals.”
The Financial Health Network is the leading authority on financial health. We are a trusted resource for business leaders, policymakers and innovators united in a mission to improve the financial health of their customers, employees and communities. Through research, advisory services, measurement tools, and opportunities for cross-sector collaboration, we advance awareness, understanding and proven best practices in support of improved financial health for all. For more on the Financial Health Network, go to www.finhealthnetwork.org and follow us on Twitter at @FinHealthNet.
About the U.S. Financial Health Pulse Report
The U.S. Financial Health Pulse is made possible through a founding partnership with Flourish, a venture of The Omidyar Group. Additional support is provided by MetLife Foundation, founding sponsor of the Financial Health Network’s financial health work, and AARP. The Financial Health Network is partnering with the University of Southern California Dornsife Center for Economic and Social Research (CESR) to field the study to their online panel, the Understanding America Study. The Financial Health Network is also working with engineers and data analysts at Plaid to collect and analyze transactional and account data from study participants who authorize it.