Highlighting some frightening statistics, the Center for Financial Services Innovation’s (CFSI) 2018 U.S. Financial Health Pulse reminds us of why we need to continue to work on building financial literacy with our clients.
- 47 percent of Americans say their spending equals or exceeds their income.
- 41 percent say this was because their spending was unusually high, income low or both in past 12 months.
- 26 percent say spending always exceeds income, suggesting this is a permanent state for millions of Americans.
- 36 percent of Americans are unable to pay all of their bills on time.
- 45 percent of Americans say they do not have enough savings to cover at least three months of living expenses.
- 30 percent of Americans say they have more debt than is manageable.
- 40 percent of Americans do not agree with the statement “My household plans ahead financially.”
They also showed that you cannot predict a person’s financial health based solely on income or demographics. Fifteen percent of those with a household income less than $60,000 are financially healthy, while 50 percent of those with a household income of at least $100,000 are either financially vulnerable or merely coping.
The missing link: action
The mission of CFSI is to improve financial health for all. It started more than 15 years ago with a specific focus on the unbanked and underbanked consumer, and the goal of helping organizations develop meaningful access and quality products.
John Thompson is the organization’s chief program officer. “Financial institutions should be managing toward outcomes for their customers, not just selling products,” he says. Because financial health is measurable, he adds, banks should be designing products that move the needle. “One of the things we’ve learned is that effective financial education needs to be timely, relevant [and]actionable.” He argues that in the past, financial education has not reached that ideal.