SaverLife Members’ Financial Health: 2023
As a member-first organization, SaverLife monitors and measures the financial health scores of its members to better understand the peaks and valleys of their financial lives. We use these scores and insights to evolve the offerings on our platform and to inform our research and policy efforts so that we can directly address the systemic economic challenges our members face. By actively observing our members’ financial health scores over time, we identify trends and opportunities for deeper analysis and exploration that the larger financial health field can use in their own work.
The financial health of SaverLife members in 2023
When joining SaverLife, new members are invited to complete the Financial Health Network’s Financial Health Survey (FHS), which includes eight questions grouped into four categories: spending, saving, borrowing, and planning.
Together, the four FHS categories provide a holistic assessment of financial health and can be summed up to produce an overall financial health score of 0 to 100. The scoring is broken down by:
0 to 39 — Vulnerable
40 to 79 — Coping
80 to 100 — Healthy
In 2023, the average financial health score of SaverLife members was 41.86, which just barely falls into “coping.”
Financial Health Indicator: Spending
What do these results mean?
Only 26% of SaverLife members had financial “slack” in
2023 — money left over at the end of the month because their income was more than their expenses. An additional 24% just “broke even” while the remaining 50% were “underwater” — unable to keep up with basic expenses like housing, child care, transportation, groceries, and healthcare based on wages and other forms of income. These results are a reminder that the incomes of most members are too low to cope with a growing affordability crisis in housing, transportation, childcare, healthcare, and steeper rises in grocery prices than in years past.
What do these results mean?
Paying bills on time — especially credit card and loan payments — is important for:
Improving a person’s credit score*
Avoiding late fees and other penalties
Preventing disruptive events like eviction and utility cut-offs
Over half (52%) of members said they paid all their bills on time or nearly all their bills on time in 2023. For the remainder of members, cash flow timing may be a
struggle — when bills are due before the next payday, or members forget when certain bills are due. Bill autopay can help, but not if cash flow is mistimed and if members do not have money in short-term savings they can use.
* For example, while utility companies, mobile phone companies, and landlords may not report on-time payments to credit bureaus, they may report past-due (delinquent) accounts which will hurt a person’s credit score.
Financial Health Indicator: Saving
What do these results mean?
People need to have money set aside to pay for their rent or mortgage, food, and other basic needs in case they lose a job or suffer some other major financial setback. Personal finance experts recommend having money to cover at least three months of usual expenses, but this was true for only 27% of our members in 2023. Having money set aside reduces the likelihood that people will experience poor outcomes like:
Food insecurity
Eviction
Utility cut-offs
Using high-cost credit like payday loans
What do these results mean?
Financial behavior has a strong psychological component: financial confidence. This means that a person has the belief that they know what to do, how to do it, and the resources to put these ideas into action.
Unfortunately, only 26% of our members in 2023 were confident in meeting their long-term financial goals. This may mean they need more guidance about how to plan ahead to buy a home, but it could also mean that they see homeownership as difficult to achieve given the amount of their income and savings relative to the cost of housing.
Financial Health Indicator: Borrowing
What do these results mean?
Nearly half (49%) of our members struggled with debt in 2023 while a little less than half either had no debt or a manageable amount of debt.
Problems managing debt could result in missing or being late on credit card and/or loan payments, which can hurt a person’s credit score and result in higher interest rates or being denied credit altogether — creating a downward spiral. Problems repaying secured debt like mortgages and auto loans may result in repossession of property, while unsecured debt problems are associated with a decline in mental health. Even if debt payments are made on time, a high debt-to-income ratio may make it difficult to save and hard to afford important needs like rent and food.
What do these results mean?
Credit scores from 670 to 739 are considered “good”, 740 to 799 “very good”, and 800 and above “exceptional.” A score of 670 or higher is also considered prime, meaning that it’s easier for a person to access credit at lower interest rates.
While over two-thirds of all consumers have a credit score that ranges from good to exceptional, in 2023, only 17% of SaverLife members considered their scores to be in this range. This means that the vast majority of members may have difficulty qualifying for credit cards and loans with prime rates, and instead may have to turn to high-cost credit.
Financial Health Indicator: Planning
What do these results mean?
Different types of insurance guard against major financial losses. For example, health insurance is important for paying most of the costs from major medical events like surgery and/or hospitalization.
About one-third of SaverLife members were confident in their insurance coverage in 2023. The remainder felt that they were at risk financially should something happen, like a car accident or property damage from a major storm or natural disaster. Additionally, 17% of members said they had no insurance.
What do these results mean?
Financial decision making is
inter-temporal. This means that today’s decisions can affect financial outcomes down the road. The classic example is whether and how much people save for retirement.
Over a third of SaverLife members saw themselves as planning ahead in 2023. However, the length of time they planned ahead could vary from person to person. It could mean next month or 10 years from now.
A famous and well-cited study in the journal Science showed that having too little income negatively impacts the decisions people make. So for the 40% of SaverLife members who said they didn’t plan ahead in 2023, doing so may have been hard when there were other, more immediate decisions to address, such as whether to buy groceries or take a risk with paying rent late.
Conclusion
The FHS provides an important snapshot of SaverLife members’ financial health. But what might it take for members to improve their current financial situations? SaverLife provides support, nudges, and incentives to help members save money. This is important because the act of saving offers opportunities to plan ahead, while increased savings makes it easier to pay bills on time, reduce dependence on debt, and meet long-term goals. For other aspects of financial health, SaverLife provides content and referrals to help members reduce debt, improve credit scores, increase income, and so much more.
While it’s important for SaverLife members to take action to improve their financial health, we recognize that doing so is hard for many of our members due to structural economic factors well beyond their control, like:
Wages
The generosity of public benefits
The costs of a “basket” of basic needs that include — housing, food, healthcare, childcare, utilities, and transportation
Rising interest rates
These challenges are further compounded with economic threats imposed by climate change. That’s why SaverLife uses our research to produce insights that can change public policies and industry practices. It matters that we create opportunities and access for our members to maintain financial stability, achieve their financial health goals, and plan for the futures they’ve been banking on.
