The Four Levels of Financial Health: Where Do You Stand?

14 Mar

The Four Levels of Financial Health: Where Do You Stand?

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The Four Levels of Financial Health: Where Do You Stand?

Did you know that 57% of American adults are struggling financially? Unfortunately, in today’s society, that number doesn’t come as a shock to most of us. However, something else may come as a surprise. While over half of American adults are facing financial issues, they are all facing them in different ways. Indeed, there are four “levels” or “sections” of struggling financial health: the financially striving, the financially tenuous, the financially unengaged, and the financially at-risk.

Each of these “sections” present a different level of financial stress. Yet, each one also exhibits a problem with financial planning, preparation, and execution. For this reason, we are going to take a closer look at each group individually.

These “levels” were originally depicted by the Center for Financial Services Innovation or CFSI. Sponsored by the MetLife Foundation and the Ford Foundation, the CFSI conducted a Consumer Financial Health Study in order to “better understand the current state of financial health in American and consumer challenges”.

It’s vital for Americans (including you) to understand the results of this study. Why? Because it affects you directly. Chances are, you belong to one of these struggling categories. Knowing where you belong can help you acknowledge your financial problems through identification. It can also help you determine what to do next.

Let’s get started.

The Financially Striving

Statistics show that, of those belonging to the “financially striving” group, 42% have an unhealthy amount of debt when compared to their income. Much of this percentage has to do with financial intelligence, and what the older members of the group chose to do when they were younger (i.e. – higher education and mortgages).

When it comes to the demographics of the group, 14% are sixty-five or older, 27% are between the ages of fifty and sixty-four, 26% are between the ages of thirty-six and forty-nine, 20% are between the ages of twenty-six and thirty-five, and 14% are between the ages of eighteen and twenty-five. Looking at the numbers, it seems that “financial smarts” don’t belong solely to the older generations – indeed, they are pretty evenly spread.

Other statistics show that, of all members of the group:

  • 40% use mobile financial services regularly
  • 50% save whatever money is left over at the end of the month
  • 100% plan ahead for large, irregular expenses

Overall, this group is prepared for emergencies and handles their finances well. However, they do struggle with an unhealthy amount of debt compared to their income.

The Financially Tenuous

This group is a bit less impressive in their ability to plan ahead.

Of the members of the group, 41% have an unhealthy amount of debt when compared to their income. This is just 1% less than those in the “financially striving” group.

Demographics are also spread evenly, with 12% being sixty-five or older, 28% being between the ages of fifty and sixty-four, 25% being between the ages of thirty-six and forty-nine, 23% being between the ages of twenty-six and thirty-five, and 12% being between the ages of eighteen and twenty-five.

Other statistics show that, of all members of the group:

  • 42% use mobile financial services regularly
  • 53% say that they “always find themselves living paycheck-to-paycheck”
  • 0% plan ahead for large, irregular expenses

This group seems to represent a large portion of the American middle class. Are they able to make ends meet? Yes. But they struggle to plan for their future, mostly because they are forced to live paycheck-to-paycheck.

The Financially Unengaged

While the previous two groups showed a distinct need to understand their financial situation, the “financially unengaged” lack that foresight. Perhaps they’ve never been taught to focus heavily on their finances. Whatever the case may be, a significant change is needed.

Of the members of this group:

  • 86% don’t know how much their monthly debt payments are
  • 62% don’t know how long they could last in the event of a sudden loss of income
  • 55% don’t have a credit card
  • 38% don’t save

The demographics of this group are especially interesting. The vast majority of “financially unengaged” Americans are below the age of sixty-four. 26% are between the ages of eighteen and twenty-five, suggesting that financial intelligence comes with experience.

The Financially At-Risk

This group represent the American lower class, many of them struggling below the poverty line.

Of the members of this group:

  • 48% have an unhealthy amount of debt when compared to their income
  • 62% could only make ends meet for a month or less given a sudden loss of income
  • 67% use debit cards always or often to make purchases
  • 74% don’t save

Rather than not caring about their financial situation, members of this group aren’t given a choice. And, when looking the demographics, the majority are between the ages of twenty-six and sixty-four.

If you belong to any of the above groups, we encourage you to analyze your financial status and determine what you can do to change your position. This may involve taking out Small Dollar Credit loans, obtaining a credit card, or planning for the future.


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