Association for Public Policy Analysis & Management

We’ve all heard the statistics from the FDIC that nearly one out of 13 households (7.7%) are unbanked and that nearly 3 out of 10 (27%) are underserved.  But the CFSI’s 2014 Consumer Financial Health Survey (CFHS) revealed that nearly 3 out of 5 households – 57% - are not financially healthy, a much larger segment than the un- and underbanked.  This study assesses their financial health, defined as individual’s day-to-day financial system functions well and increases the likelihood of long-term financial resilience and opportunity.

Across June and July 2014, we surveyed 7,152 households -- including a special over-sample of household with income below $50,000 – asking them about their budgeting, credit, spending, saving, attitudes, preferences, behaviors, and the financial products and technologies they use.  Our initial analysis focused on the consumer financial health segments that these data revealed.  Subsequent analyses will dig deeper into these data with a focus on key consumer segments.

Joint work with NYU and CFSI has shown a light on the key role that income volatility plays in the lives of low-to-moderate income (LMI) households.  The proposed presentation at APPAM will share insights on the LMI (under $50,000) segment of our CFHS sample.  We find that one-third of LMI households find it difficult to predict their income from one month to the next – the paper will pay special emphasis to income volatility, planning behaviors, and future-mindedness of these households and how these relate to financial health.  We will explore differences in behaviors and attitudes between the low and moderate income portions of our sample and provide data-driven suggestions for policy, practice, and education.