The financial health of LMI households is in decline — here’s what we do

As a member-first organization, SaverLife monitors and measures the financial health scores of our 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.

A financial health baseline

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 they 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

With the first six months of 2024 having come to pass, we recently analyzed how new members joining SaverLife in these first six months of 2024 compared to those joining in the first six months of 2023. 

The state of members’ financial health before joining SaverLife in 2024

In the first half of 2024 (from January through June), the average Financial Health Survey score among newly joined members was 40.53 compared to 45.23 for the first half of 2023, a statistically significant difference (p < .001).

We use the same periods in each year for an “apples to apples” comparison which controls for seasonality effects — the idea that income and expenses can be different at different times of the year. Month-to-month changes in the first half of each year look similar with scores rising during tax season (as many members receive tax refunds) only to fall off in May and June:

New members in 2024 are experiencing additional challenges

It’s important to understand these results reflect our members’ financial health when they first joined SaverLife. So a different way to think of these results is that the financial health of members who joined in the first half of 2023 was better than the financial health of members who joined during the same period in 2024. 

This could mean one of two things: 1) the cohort of SaverLife members who joined in the first half of 2024 were different than the cohort from the previous year or 2) economic conditions were different (in this case, worse) in the first half of 2024 than they were the prior year. 

For possibility #1, members in each year look very similar with respect to age, income, race/ethnicity, and geography. For example, 23.66% of the first half 2023 cohort were from the South compared to 23.41% in 2024. For possibility #2, in the first half of 2024, interest rates are up, yet unemployment remains about the same, and wage growth continues to outpace inflation.

Looking ahead: how SaverLife is impacting financial health outcomes

Now more than ever, people are looking for the support and resources needed to navigate their financial health journeys. When we launched our first of its kind financial health platform specifically for people living on low-to-moderate incomes (LMI), we knew there was an incredible opportunity to serve LMI consumers in a new and personalized way that took their entire financial life into consideration. This most recent analysis proves that there is a growing need for SaverLife — when people are joining our community with lower financial health scores than from the previous year, there is an even greater opportunity for SaverLife to make a difference.

These findings are an opportunity to do deeper research into topics like housing insecurity and climate change economic impacts to understand if and how external factors are contributing to Financial Health Scores of incoming SaverLife members. By taking a closer look at these economic risk factors, and talking directly with members to better understand their experiences, we can advocate for better programs, policies and products that can have a positive impact on the financial health of our members.

We must use research to produce insights that can change public policies and industry practices to remove the structural economic barriers that are obstacles for many of our members.