A new study finds that personal debt levels undermine the financial security of many Americans. Learn more.
Americans are finding it a little bit easier to make ends meet than they were three years ago, according a study assessing the financial well-being of U.S. citizens released today by the Financial Industry Regulatory Authority.
The encouraging news is tempered by other findings indicating there’s “a lot more work to do” to ensure financial security for most Americans, Richard Ketchum, FINRA CEO, said in a statement delivered in Washington, DC.
A growing share of Americans has set aside money for an emergency, but more than half lacks such a rainy day fund, according to FINRA’s 2012 National Financial Capability Study, a follow up to a 2009 study. A higher percentage of Americans indicate they are satisfied with their personal financial situation, but the share is less than one-fourth.
“There are still concerns,” Ketchum said. “Debt, for example continues to be a problem.” More than 40 percent of the student participants believe they owe too much debt, and nearly half of credit card holders carry debt and pay interest on the balance. Ten percent uses credit cards for cash advances.
More than one-in-five participants with a mortgage report owing more than their home is worth, and more than one-fourth reports past-due medical bills. Student loan debt is held by 20 percent of all respondents, including 36 percent of Millennials, and more than half of Americans with student loan debt say they are worried they will not be able to pay it off.
“That sense of concern about debt appears to be pervasive,” Ketchum said. ”One fascinating finding of the study is that self-reported feelings of being overwhelmed by debt change very little across income brackets. In other words, no matter how much income they earn, a significant number feel they have too much debt.”
Financial well-being varies significantly among regional and demographic lines, according to the study.
“Financial fragility” – lack of available funds to meet an unexpected $2,000 expense – was reported by nearly 70 percent of moderate- and low-income households. Younger Americans appear more financially stressed than older Americans by student loans, mortgage payments and unpaid medical bills. Residents of California, Massachusetts and New Jersey report the highest levels of financial well-being.