Idaho Survey Data at a Glance
Making Ends Meet
A significant part of financial capability is the ability to make ends meet through adequate savings. Having resources for immediate medical needs is also an important component. In Idaho, 18% of individuals reported that over the past year, their household spent more than their income (not including the purchase of a new home, car or other big investment), while 27% of individuals reported having medical bills that are past due. Individuals who are not balancing monthly income and expenses are not saving and thus may find themselves struggling to make ends meet. Overdue medical debt can further compound a household’s ability to meet monthly financial obligations.
Many Americans are not planning ahead for their financial future. In Idaho, 61% of individuals lack a rainy day fund to cover expenses for three months, in case of emergencies such as sickness, job loss or economic downturn. Individuals without this emergency fund lack adequate protection against financial emergencies or other shocks which may threaten their financial stability.
Managing Financial Products
The way financial products - such as non-bank borrowing, credit cards and home loans - are used and managed can illustrate a lack of financial capability for many Americans. In Idaho, 28% of individuals reported using one or more non-bank borrowing methods (e.g. payday loans) in the past five years. Additionally, 34% of those with credit cards paid only the minimum on their credit cards during some months in the last year; and 20% of homeowners owe more on their home than its current market value. These common means of borrowing often come with long-term consequences for personal finances.
Financial Knowledge and Decision-Making
Americans demonstrate relatively low levels of financial literacy and have difficulty applying financial decision-making skills to real life situations. Study participants were asked five questions covering aspects of economics and finance encountered in everyday life. In Idaho, 56% are unable to answer more than three of the five questions correctly. Also, most Americans do not comparison shop for credit cards, with 64% saying that in obtaining their most recent credit card they did not collect and compare information about cards from more than one company. Individuals need at least a fundamental level of financial understanding. This knowledge, paired with financial decision-making skills, can best ensure an individual’s financial capability.