3 Factors that Shape Financial Health in America

Written by Thea Garon, Director, CFSI

Despite a surging stock market and record-low unemployment, millions of Americans are struggling financially. Nearly half of Americans (47%) say their spending equaled or exceeded their income in the last year. One in three people (30%) say they have more debt than is manageable. More than a third of Americans (33%) are not confident they are on track to meet their long-term financial goals.

These startling figures come from the inaugural baseline report of the U.S. Financial Health Pulse, a new research initiative designed to provide an ongoing snapshot of the financial lives of Americans. In this seminal report, we look beyond the headlines at Americans’ financial health, a composite metric that considers the totality of an individual’s financial life.

The results of the 2018 baseline study are sobering:

In this report, we also explore three factors that play an important role in shaping one’s financial health:

1. Financial Behaviors

An individual is considered Financially Healthy if she is able to spend, save, borrow, and plan in ways that allow her to be resilient and pursue opportunities over time. In our research, we find that the following financial behaviors are highly correlated with positive outcomes across the eight indicators of financial health:

  • Having an emergency savings account
  • Having calculated how much savings are needed for retirement
  • Having talked with a financial advisor or planner
  • Using a budget or other type of plan to track spending
  • Using automatic transfers to put money into savings accounts

While the relationship between these behaviors and financial health is not causal — i.e. we cannot definitively say that these actions will improve one’s financial health — this research begins to shed light on the behaviors and habits that might help individuals lead financially healthy lives.

2. Demographic Characteristics

Financial health is also correlated with certain demographic characteristics such as age, income, education, employment status, gender, and race. However, it is impossible to predict a person’s financial health based solely on demographics. For example, 15% of people with household incomes less than $60,000 are Financially Healthy and 50% of people with household incomes of at least $100,000 are either Financially Coping or Financially Vulnerable.

3. Trends in Our Society

Financial health is also shaped by powerful trends in our society, often beyond an individual’s control. In the 2018 baseline report, we explore three of these trends through the lens of financial health. We find that:

  • Americans who struggled financially growing up are less likely to be Financially Healthy today than those who did not struggle financially. This is particularly true for black and Hispanic Americans who have less generational mobility than white Americans.
  • The rising costs of basic living expenses are challenging Americans’ ability to lead financially healthy lives. Those who struggle to afford housing, food, and healthcare are less likely to be Financially Healthy and more likely to be financially stressed than those who do not struggle to afford these basic necessities.
  • Americans who experience instability in the workplace are falling behind as they strive for financial health. This instability weighs most heavily on middle-income employees; but this group also stands to gain the most from employee-provided benefits, such as healthcare and paid leave.

Collectively, these findings suggest that policymakers and leaders across financial services, housing, healthcare, education, and employment can play an important role in improving the financial lives of Americans. At CFSI, we intend to support these stakeholders by providing them with the tools, resources, and knowledge they need to make a meaningful difference in the lives of those they touch.

Armed with ongoing insights from the U.S. Financial Health Pulse that shed light on the true nature of Americans’ financial lives, our chances of improving the lives of millions of people have never been greater. We invite you to join us on this journey.

This post is the first in a series of posts from the authors of the U.S. Financial Health Pulse baseline report. In the coming months, we will discuss different cuts of the data and respond to compelling questions and feedback we receive from our audience.


Thea Garon is a Director on CFSI’s Program Team. She leads the U.S. Financial Health Pulse, a groundbreaking research initiative designed to monitor and track the financial lives of Americans. She holds a Masters of Urban Planning from NYU’s Robert F. Wagner School of Public Service and a B.A. in History from Carleton College. She resides in Chicago, IL.