Majority of U.S. Consumers Struggle Financially: CFSI.
Byline: David Morrison
The Center for Financial Services Innovation has released more information in regard to the 57% of U.S. consumers that it previously identified through its research as financially struggling.
The Chicago-based financial services think tank released a study in March 2015 that found 138 million adults in the U.S. struggled to manage and control their finances.
CFSI President/CEO Jennifer Tescher explained the importance of the fundamental data on this population when the CFSI released its broad report in March.
"If we are going to meaningfully and measurably address financial health in this country, we have to start with a deep understanding of consumer preferences, behaviors and pain points," Tescher said. "This study reveals significant opportunities for policymakers, nonprofit organizations and financial service providers to create real solutions and empower millions of Americans to live healthy financial lives."
In its latest update to the study, CFSI researchers identified four distinct types of consumers within the 138 million.
The first group, Financial Strivers, are consumers who, CFSI said, have an unhealthy amount of debt to income (42%) and try to plan for future, irregular large expenses. Their largest age group is consumers aged 50-64 (27%), 40% of them use mobile financial services regularly and 50% said they regularly saved what they did not spend.
The second group, the Financially Tenuous, also has what CFSI calls an unhealthy ratio of debt to income (41%), but does not plan for future, irregular large purchases. Their largest age group is also aged 50-64 (28%) and 42% of them said they use mobile financial products, while 53% of them said they felt they live paycheck to paycheck.
The Financially Unengaged, the third group, might have high debt to income ratios, but CFSI found 86% of them don't know how much debt they held. Their largest age group includes consumers aged 18-25 (26%), 55% do not have a credit card and 38% reported they do not save. A full 62% said they did not know how long they could last in the case of a sudden loss in income.
Finally, CFSI said the fourth group, the Financially At Risk, also had unhealthily high debt to income ratios (48%), and 62% said they would only be able to make ends meet for a month or less in the case of a sudden loss in income. A full 33% of this group is aged 50-64, 67% use debit cards to pay for things always or often, and 74% said they do not save.