Consumer Financial Health Study

Understanding and Improving Consumer Financial Health in America

By Aliza Gutman, Thea Garon, Jeanne Hogarth, Rachel Schneider

Explore more about financial health

Learn more

This research explores the state of financial health in America in a groundbreaking examination of consumer behaviors, attitudes, and preferences. In it, we define seven consumer financial health segments based on a combination of behaviors and attitudes, offering an analysis that goes beyond income, age, education, or credit score.

What are those seven segments and how can you improve the design and delivery of your products to better serve your customers?

The Consumer Financial Health Study’s survey was fielded from June through August 2014. More than 7,000 individuals over the age of 18 responded to the survey, and the data has been weighted to ensure it is representative of the US population. The Consumer Financial Health Study benefited from guidance and generous financial support from Ford Foundation and MetLife Foundation. The Consumer Financial Health Study also benefited from generous financial support from American Express.

This report, first published in March 2015, has been updated to include revised calculation methodologies for two debt ratios: non-mortgage debt-to-income ratio and financial obligation ratio. The figures that were updated are noted throughout the paper.

Experian® and LexisNexis® Risk Solutions provided in-kind support to facilitate inclusion of objective measures of creditworthiness (VantageScore® credit score and RiskViewTM score, respectively) into this study.

Generous financial support provided by:

  • American Express
  • FordFoundation_Logo_Transparent
  • MetLife Foundation

Executive Summary

The Center for Financial Services Innovation (CFSI) has an ambitious goal: to improve the financial health of Americans, with a focus on those who are struggling and underserved.

Financial health is achieved when an individual’s day-to-day financial system functions well and increases the likelihood of financial resilience and opportunity.

For over ten years, CFSI has conducted original research to develop a deep understanding of the needs of underserved consumers; convened cross sector groups to identify best practices; invested in financial technology and nonprofit innovation; and advised financial services providers on strategy and product development. The concept of financial health reflects an evolution in thinking about how to serve Americans who are struggling with their finances—a group sometimes referred to as “unbanked” or “underbanked.” While the terms un- and underbanked were effective at raising awareness of the challenges these consumers faced, and helped to galvanize financial service providers and policymakers to take notice, the labels have outlived their usefulness. Focusing on positive financial outcomes for Americans—financial health—can transform product design and policy development. Understanding the drivers of financial health can shed light on the ways in which consumer behavior and decision making, policy design, government and nonprofit social services, and high-quality financial products that are aligned with CFSI’s Compass Principles can create increased opportunities for consumer success.

Establishing and maintaining financial health requires individual persistence, a supportive economic environment, availability of robust social services, and access to high-quality financial products and services. For policymakers, consumer advocates, and other public leaders, supporting consumer-focused policies that enable financial health will result in macroeconomic benefits. Financial service providers have an opportunity to gain a competitive advantage by committing to understanding, measuring, and helping to improve consumers’ financial health. High-quality products and services that help consumers make better financial decisions, retain greater control over their money, and plan for the future, are important tools for achieving financial health. For-profit and nonprofit providers that successfully address consumers’ needs will be able to acquire new customers and better serve existing ones.

They will be poised to reap the rewards of satisfied customers,including long-term loyalty and the associated revenue that comes with this loyalty. Investing in consumers’ financial health is fundamentally a sound business decision; there is no better way to build a successful franchise than to offer products and services designed to promote financial health.

To assess the current state of financial health in America and to glean insights that can inform cross-sector efforts to improve consumer outcomes, CFSI designed and commissioned a nationally representative survey focused on consumers’ financial behaviors, attitudes, and preferences. CFSI’s Consumer Financial Health Study includes this survey and a segmentation analysis that groups individuals based upon patterns of responses to a range of survey questions corresponding with subjective and objective indicators of financial health. This report explores the resulting financial health segmentation and puts forth a number of consumer insights from this survey and recommendations that draw upon CFSI’s decade of experience in this field to help policymakers, social services agencies, and financial service providers better serve the millions of Americans who are struggling financially.