The FINRA Foundation’s National Financial Capability Study (NFCS) has tracked financial wellbeing in the U.S. since 2009, providing valuable insights into how Americans manage their money, their financial knowledge, and their ability to handle financial shocks.
After more than a decade of data collection, these key trends have emerged — many of which have implications for employers who want to understand the financial challenges their employees face.
1. Financial literacy has declined
Since 2009, the NFCS has measured financial knowledge using a five-question quiz covering core financial concepts. The results show a steady decline in financial literacy over time, despite the proliferation of financial education programs and resources available through traditional financial wellness benefits offered by employers and publicly-accessible resources. For example:
- In 2009, respondents answered an average of 3 out of 5 questions correctly. By 2021, that number had fallen to 2.6.
- The proportion of respondents considered to have “high financial literacy” (4+ correct answers) dropped from 42% in 2009 to 32% in 2021.
2. Financial fragility is common
One of the study’s key measures is whether people could handle an unexpected $2,000 expense within 30 days. The findings suggest that a large portion of the population remains financially vulnerable:
- Many Americans lack emergency savings.
- A significant portion of households rely on credit cards or loans to cover unexpected expenses.
- Income volatility—fluctuations in pay from month to month—contributes to financial instability for many, particularly frontline employees.
3. Financial health varies significantly by income and education
The study finds persistent gaps in financial health based on factors like income, education, and race/ethnicity:
- Higher-income individuals are far more likely to have emergency savings and feel financially secure.
- Those with lower levels of education tend to score lower on financial literacy assessments.
- Black and Hispanic respondents report higher levels of financial stress and lower financial literacy compared to White respondents.
These disparities underscore the importance of financial inclusion efforts, particularly among employers with large frontline workforces, where women and people of color are overrepresented, and many workers earn lower incomes and/or hourly compensation.
4. Planning for retirement remains a challenge
While some Americans are improving their financial stability, a significant percentage of workers have not set aside money for retirement. Given the prevalence of financial fragility, many are focused on immediate financial needs and money emergencies, preventing them from saving for their future.
How employers can act on these financial health insights
Understanding these trends can help employers determine how their employee wellbeing strategies can best support the financial health of contributors across different income levels and backgrounds, including the 70% of Americans who are not financially healthy, and whose needs won’t be served until employers think beyond traditional financial wellness approaches.
To learn more about how Brightside Financial Care can support financially vulnerable employees, click here.
