Despite a strong economy, millions of Americans face financial struggles. These difficulties include lower household net worth, increased loan defaults, and high levels of credit card debt. These are the findings in the recent report, U.S. Financial Health Pulse, published by the Center for Financial Services Innovation (CFSI), in partnership with Omidyar Network, the Metlife Foundation, and AARP.
The report assesses various financial health indicators that include income, bill payment, spending, saving, debt load, insurance, retirement planning and credit scores. When combined, these factors provide a composite view of the spending, saving, borrowing, and financial planning activities of Americans.
Some of the findings of the 2018 baseline report include:
17 percent of American are viewed as financially vulnerable, 55 percent financially coping, and 28 percent financially healthy.
47 percent of respondents reported spending that equals or exceeds their income.
36 percent are unable to pay all of their bills on time.
30 percent say they have more debt than is manageable.
U.S. Financial Health Pulse is intended to guide financial institutions, government agencies, and community organization in developing educational programs and financial products to better serve the needs of Americans. This study will be conducted each year to determine changes in America’s financial health.
For additional information on U.S. Financial Health Pulse and to view the report, click here.
Have students talk to friends to determine which of the financial health indicators they believe to be most important.
Have students create a survey instrument to measure various financial health indicators.
What are the benefits of measuring financial health in our society?
Describe actions that might be taken by business, government, and community organizations to address the financial difficulties faced by people.
The joy of the holiday season can be overpowered with shopping stress and financial difficulties. To avoid this situation, consider this approach:
In mid-to-late November, create a spreadsheet to manage your holiday spending. Categories might include gifts for family and friends, donations to charity, holiday meals along with other items such as shipping, wrapping paper, decorations, parties, and travel.
Enter realistic amounts that you are able to spend for the various people on your gift list and for the other categories.
Monitor your actual spending, attempting to stay within your budget.
Based on this year’s experiences, adjust categories and amounts for the 2019 holiday season.
The spreadsheet might include columns for name/item, budgeted amount, actual amount, difference, and notes for future reference. Starting earlier in the year, consider setting aside holiday money to avoid taking away funds from your normal budget. You might also consider using credit card and other reward points for gifts.
For additional information on a holiday spending spreadsheet, click here.
Have students create a spreadsheet that might be used to monitor holiday spending.
Have students talk to others to obtain ideas for not overspending during the holiday season.
How would you make use of a spreadsheet for holiday spending?
Describe actions that might be taken to monitor and control holiday spending.
According to the Northwestern Mutual Planning and Progress Study on financial well-being, Americans have several worries. Based on interviews with 2,646 adults, 85 percent of respondents reported financial anxiety in some form. Approximately two-thirds of those surveyed indicated that financial anxiety negatively affected their health. In addition, 36 percent of those responding had increasing levels of financial anxiety over the past three years.
In the study, the greatest financial fears were:
Having an unplanned emergency
Having unplanned medical expenses
Having insufficient savings for retirement
Outliving retirement savings
Becoming a financial burden
Not able to afford healthcare
Loss of a job
Death/loss of primary wage earner
Having poor credit
Having to file bankruptcy
Being a victim of a financial scam
To address these concerns, the study recommends the following actions:
build an emergency fund for unplanned expenses
invest properly for retirement and long-term financial security
review your finances regularly to revise goals and savings activities
These actions can help to reduce the financial anxiety reported by a large portion of Americans.
For additional information on financial anxiety, go to:
Pokémon Go has resulted in a loss of money and other concerns. In this popular game, users interact virtually with Pokémon characters placed in real world settings. The app is free to download, however there are in-app purchasing opportunities. Players are encouraged to pay for hints and tips for a competitive advantage.
In addition to financial losses, the Pokémon Go app has been used to lure robbery victims. Other players have been robbed of their phones. Police departments caution players to be aware of their surroundings.
Be warned that “free isn’t the same as no cost.” Users may pay in the form of data use, legal confrontations, injuries, and reduced work productivity. Higher insurance costs can also occur when playing the game while driving, which might result in an auto accident. Social concerns include disturbing church services and other occasions with players capturing creatures during the events.
For additional information on the cost of Pokémon Go, click here.
Have students suggest ways that an app game might be used for improved learning or assisting others in need.
Have students describe safety precautions when playing Pokémon Go.
Why are people attracted to the game, often with a personal or financial cost?
What actions might be taken to avoid the financial and personal dangers of the game?
You are in line at your local grocery store and all the snacks, candy, and cheap gadgets are beckoning to be picked up and added to your shopping bag. You are shopping on-line and you only need to spend $8 more to get free shipping. How do you avoid falling prey to impulse buying? How are marketers reducing friction to get you to buy more stuff? As a consumer, factoring in additional transaction costs will help you avoid making impulse purchases.
Gas prices have been low for a few years but, it is always good to save a few more dollars!
What if you are in a new city? Gas prices can vary by 10-15 cents per gallon in a matter of a few blocks. How would you know where to find the cheapest gas? Good news! The GasBuddy app can help you find the best prices on the go.
While beneficiary, collateral, and fair market value are familiar to many, these terms can be especially confusing to those with limited English-language skills. In an attempt to assist various people, the Consumer Financial Protection Bureau has created the Newcomer’s Guides to Managing Money to provide recent immigrants with information about basic money decisions. These guides offer brief suggestions to those who are new to the U.S. banking system. The guides also include guidance for submitting and resolving problems with a financial product or service.
The Newcomer Guides include these topics:
Ways to receive your money, comparing cash, check, direct deposit, and debit cards.
Checklist for opening an account, to assist with starting a bank or credit union account.
Ways to pay your bills, providing guidance on whether to pay by check, debit card, credit card, or online.
Selecting financial products and services, providing assistance on deciding which financial services are right for various household situations.
Print copies of the guides can be ordered or downloaded. These publications are available to English and Spanish with additional languages to be offered in the future.
For additional information on money guides for newcomers:
Financial goals are communicated in many formats, and are good to have. However, too often, a goal is lacking the “why.” While various financial planning actions are beneficial, quite often, little thought is given to the motivation behind a certain goal. Without this “why,” minimal internal motivation is likely to be present to see a goal to completion. The “why” of a financial goal will help you persevere when encountering challenges that could derail your achievement of a goal.
Not being able to answer the “why” may indicate that the goal is not worth your efforts. The “why” will also assure that a goal provides a higher level of satisfaction when it is achieved. The process may require a series of “why” questions as you respond to the initial “why.”
Instead of being an afterthought, the “why” of your financial goals should be a driving force in creating and achieving these personal economic objectives. Be able to decide if a goal is a result of advertising, societal influences, or reflective thought about your personal financial situation. This action should result in meaningful goals rather than just efforts to accumulate more money or more stuff.
For additional information on financial goals, click here.
Have students talk to people to create examples of financial goals.
Have students ask a series of “why” questions to help other people to better focus their personal financial goals.
What are common motivations that influence personal financial goals?
How might a person better understand the motivation behind personal financial goals?
A recent study from the Federal Reserve reports that almost half of consumers are not able to come up with $400 to cover an emergency expense. In contrast, the study of 5,800 Americans reported that almost one-third of Americans believed their income would increase in the upcoming year. However, many appear to be living one big expense away from financial disaster.
Other findings of the study include:
Forty-seven percent didn’t have the cash to pay for a $400 emergency expense.
One in five participants in the study reported spending amounts greater than their income.
“Underemployment” is a major concern for workers since part-time work often means a lack of benefits, especially health care coverage.
Nearly one in five Americans has nothing set aside for retirement; 39 percent of report that they have either given no thought or only a little to planning for retirement.
Despite these difficulties, Americans have seen a “mild” improvement in how they view their economic well-being since the recession ended. About 40 percent reported they were either “somewhat” or “much better” off than they were in 2009.
The report reflected that the recovery is only benefiting some. About half of college-educated respondents said they are better off than in 2009; only 37 percent of those without a bachelor degree reported an improved economic situation.
For additional information on the financial fragility of Americans, click here.
Have students talk to various people about their economic situation compared with five years ago.
Have students create survey questions that might be used to measure the financial condition of a household.
What are common measurements of personal economic well-being?
How might a person take action to improve personal economic well-being?