Richard Cordray quizzes American's about their financial health (illustrated)

Donald Trump thinks the economy is doing great — way, way better than under Obama. Actually, Obama created more jobs on his way out the door than Trump has so far.

But that’s beside the point. The important number isn’t in the stock market, or the unemployment rate, or even the median wage, though that’s getting warmer.

What matters most is whether people say they can afford to live — and that’s a hard metric to come by. Fortunately, for the first time ever, the Consumer Financial Protection Bureau has tried to come up with it. This week, it released the first ever National Financial Well-Being Survey, based on the self-reported financial health of 6,400 nationally representative Americans.

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The conclusion: 43 percent of us struggle to pay our bills, and 34 percent are suffering “material hardships,” including “running out of food, not being able to afford a place to live, or lacking the money to seek medical treatment.” Maybe Trump should start doing something to actually gloat about for these folks.

Curious how you compare? You can take a simpler version of the survey the study was based on at the CFPB website. No personal information is collected, and there are no numbers involved.

What makes us financially secure?

The study went a lot deeper than just “43 percent are struggling to pay bills.” Digging into the demographics, it’s obvious some groups do better than others — expectedly, older adults are better off. On a scale of 1-100, the average score for seniors was 61, while the overall average was 54. Adults under 35 had an average score of 51.

The numbers might not seem far apart, but that turns out to be just because people don’t like to give extreme answers. Averaged out over a huge group of people, every digit of difference is significant. Scores below 50 are likely to be suffering some kind of material hardship, while scores above 60 have less than a 10 percent chance of struggling the same way.

Here are some interesting things that didn’t seem to affect well-being scores much:

  • where you live geographically
  • whether you are male or female
  • what race you are (It played a statistically significant, but small role, the study found.)
  • whether you are self-employed, working part-time, or working full-time

And of course, a lot of obvious things did affect scores. Having a college degree, reaching retirement age, maintaining good health, homeownership, marriage, being a veteran, having a job with benefits, and having health insurance all improved scores. Meanwhile, having student loans lowered scores.

What did we learn?

The study found income alone is not a good measure of financial well-being. “For example, at all household income levels financial well-being scores vary widely, and someone with lower income can have higher financial well-being than someone with higher income,” the study says. “The same financial well-being score can reflect a diversity of circumstances, conditions, or perceptions.”

Instead, personal savings is a huge factor — people with less than $250 tucked away have an average score of 41. Those with $75,000 or more in liquid savings average 68.

There also seems to be a strong connection between people who took out a payday loan and a low score, thought the CFPB is hesitant to draw conclusions before doing more research. And there will be more research. The CFPB looks at this as just the starting point, through which “financial well-being can be meaningfully compared between people and over time”…

This report provides a first-of-its-kind view into the state of financial well-being in America. By showing whether and how a wide range of characteristics, opportunities, experiences, behaviors, skills, and attitudes are associated with financial well-being, we hope this report will catalyze researchers, policymakers, and practitioners to further explore these relationships to determine the factors that drive an individual’s financial well-being and opportunities to help improve people’s financial lives through financial education and related supports.

While Republicans might fear the report will be used to justify more regulatory “overreach”, nothing in the report itself suggests that. Instead, I see an easy bipartisan opportunity to buff up financial literacy efforts.

“Several financial attitudes and behaviors — including having a habit of savings, engaging in routine money management practices, having a long-term planning horizon and having confidence in one’s ability to achieve a financial goal — are associated with higher financial well-being,” the study found.

Those attitudes and behaviors make a big difference no matter who you are. “Even when an individual is a member of a group that is at a relative disadvantage, there may be compensating factors or strategies that offer opportunities for these individuals to boost their financial well-being.”

While we can continue to disagree about taxes, health care, and any number of other policy issues, teaching people the importance of saving and planning should have universal support. But, we didn’t need the CFPB to tell us that.

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Article last modified on November 14, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: More Than 40 Percent of Americans Can’t Pay Their Bills - AMP.

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Article last modified on November 14, 2017. Published by Debt.com, LLC .

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