Americans' finances still uneven, but many fare better, Finra finds

While U.S. adults generally did better financially in 2021 than in the decade leading up to the pandemic, their financial well-being remains uneven across different demographic groups, a study by the Finra Investor Education Foundation has found.

“Our study adds to a growing body of evidence that many U.S. adults were able to fortify their personal finances during the Covid pandemic, despite the many economic disruptions it has triggered,” said Gerri Walsh, the foundation’s president. “At the same time, the research shows that some segments of the population that have historically struggled financially continued to do so. In addition, the survey found higher financial literacy to be associated with greater financial capability.”

The study found that 53% of respondents reported having three months of emergency savings in 2021, compared to 49% in 2018 and 35% in 2009. In addition, 54% of respondents said they didn't find it difficult to cover their expenses and pay bills, compared to 50% in 2018 and 36% in 2009.

But 20% of respondents indicated that they had been laid off or furloughed in 2020 or 2021 as a result of the pandemic, and 26% experienced a large, unexpected drop in income.

Enhanced unemployment benefits and stimulus payments that were put in place during the pandemic may be responsible for a portion of the financial resilience documented in the 2021 study, Finra said in a release. It noted that stimulus funds were most frequently used to make purchases or pay bills (59%).

“Many Americans added the money to savings or used it to pay down debt (38% and 33%, respectively),” the release said.

The survey also found that respondents with higher financial literacy (scoring above the median on a seven-question financial literacy quiz) were more likely to be able to make ends meet than those with lower financial literacy. Those respondents spent less than their income (53% vs. 35%) and set aside three months’ worth of emergency funds at higher levels (65% vs. 42%). Those with higher financial literacy were also more likely to have taken steps to plan for their long-term financial future by, for example, calculating retirement savings needs (52%, compared to 29% among those with lower financial literacy) and opening a retirement account (70% vs. 43%).

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