Report: 70% of Americans Remain Financially Unhealthy

CHICAGO – The Financial Health Pulse 2024 U.S. Trends Report, released Tuesday by the Financial Health Network, found that 70% of American households remain financially unhealthy, with day-to-day financial realities worsening for many. 

The decline is offset by strengthening confidence in future financial expectations, highlighting a contradiction with important implications for those in the private and public sectors working to understand how rapidly shifting economic forces in America impact financial health.

The seventh edition of the Pulse Trends Report, which provides updates and actionable insights on consumer financial health in the United States as measured by eight key indicators, illustrates how some households were more acutely affected by the past year’s economic forces than others. Specifically, this year’s report found that households with credit card debt struggle more frequently with day-to-day financial challenges, including middle-income households, which were more likely to experience financial vulnerability. Alternatively, households with investments were more likely to be positive about future indicators and have steady day-to-day finances compared with the year prior.

“The data clearly show financial health in America – especially that of moderate- and middle-income households – remains precarious and is influenced by a reliance on credit to stay afloat,” said Jennifer Tescher, president and CEO of the Financial Health Network. “While receding inflation and lower interest rates will likely have some positive impact, Pulse findings over time reinforce that we need systems-level change from industry and policymakers to realize significant, lasting improvements in household financial health.”

Financial health indicators reflecting households’ ability to manage their immediate, day-to-day financial concerns showed signs of further weakening. Primary day-to-day indicators – spending less than income, paying all bills on time and having a manageable amount of debt – declined this year. In contrast, indicators reflecting households’ future expectations, including their confidence in long-term goals and ability to plan ahead, strengthened.

“This year’s Pulse shows that we may only be one economic fluctuation away from a vast swath of Americans, especially moderate- and middle-income households, being unable to meet their day-to-day financial obligations,” said Jo Christine Miles, director of Principal Foundation and Principal Community Relations. “This research underscores the urgent and dire need for researchers, employers, financial services providers and policymakers to commit to a cross-sector, systems-level approach to both close persistent gaps in financial access and improve financial health among our most vulnerable groups and communities.”

One reason for this divergence may be the impact of revolving credit at a time of high interest rates, which increase the cost of credit. Recently released data from the FinHealth Spend Report 2024 shows a ballooning of credit card costs, with an estimated 25% increase in fees and interest charged for credit card accounts that carry balances.

Trends show that in 2024, households with outstanding credit card debt were less frequently financially healthy and more frequently financially vulnerable than those without credit card debt. It also found that trends in financial health indicators over the past year depended on whether households had outstanding credit card debt.

This was especially true of moderate- and middle-income households, which saw sharp decreases in their ability to spend less than their income and pay all bills on time. Moderate-income households also saw a drop in their ability to have three months of living expenses saved, while middle-income households reported increasing levels of unmanageable debt. This may be attributed to the fact that households in these income groups most frequently hold revolving credit card debt.

Overall, between 2023 and 2024, households with credit card debt saw decreases in paying bills on time (60% to 57%), having savings for at least three months (40% to 37%) and managing their debt (51% to 48%). In contrast, households without credit card debt maintained steady day-to-day indicators and increased confidence in long-term goals (49% to 54%). Encouragingly, both groups reported more frequently planning ahead in 2024 than in 2023.

Whether a household held investments, including retirement accounts or nonretirement investment accounts, proved to be an important factor in both overall financial health and forward-looking indicators, with those households with investments having much stronger financial health (41% healthy) than those without (9% healthy).

Households with investments saw year-over-year increases in future-oriented financial health indicators, including confidence in meeting long-term goals (48% to 53%) and planning ahead financially (71% to 75%), while all other indicators held steady. In contrast, households without investments experienced declines in day-to-day financial indicators, specifically on-time bill payment (52% to 49%) and debt manageability (59% to 56%) over this same time period.

Published by The Business Journal, Youngstown, Ohio.