Consistent with overall economic improvement, measures of Americans’ financial stress and fragility continue to improve — even as financial literacy trends slightly downward — according to the 2016 Financial Capability in the United States study released today by the FINRA Investor Education Foundation and the Global Financial Literacy Excellence Center. The share of Americans satisfied with their personal financial condition has doubled since 2009 to 31 percent.
The survey showed improvements in several indicators, such as ability to pay bills, saving more than one spends, paying credit card balances in full and calculating retirement needs. Forty-six percent have three months’ worth of expenses set aside in an emergency fund, up 11 points from 2009. The share of recent homebuyers who put down at least 20 percent rose 9 points to 33 percent.
However, even as overall finances improved, Americans’ financial literacy continued a downward trend. In 2009, 42 percent answered four out of five basic financial questions; in 2015, only 37 percent did. The questions cover everyday situations relating to interest rates, inflation, bond prices, mortgages and risk. Middle-income respondents showed the biggest drops in knowledge relative to both poorer and wealthier respondents. Despite these results, 76 percent rated their own financial knowledge as “high” — up 9 points from 2009.
Student loans remain an area of stress for the quarter of respondents with outstanding student debt. More than half of those with student debt said they did not calculate their monthly payments before taking on the debt and that they would have changed their approach to financing their education if they had to do it again. Large shares of student loan borrowers are having a hard time managing their debt. Nearly half said they are concerned they will be unable to pay off their debt, and 37 percent have been late with a payment at least once in the previous year.
