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At a Glance: Financial Capability in New York

Financial capability of adults in New York can be measured by focusing on four key components:

  • Making Ends Meet. 18% of individuals reported that over the past year, their household spent more than their income.
  • Planning Ahead. 49% 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.
  • Managing Financial Products. 18% of individuals reported using one or more non-bank borrowing methods in the past five years.
  • Financial Knowledge and Decision-Making. On average, individuals answered 2.9 out of five financial literacy questions correctly. In addition, 57% of individuals said that, when obtaining their most recent credit card, they did not collect and compare information about cards from more than one company.

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Financial Capability Study

Making Ends Meet

Individuals who report spending more than their household income (not including the purchase of a new home, car or other big investment) are not saving. In addition, individuals who spend about the same as their income are breaking even. Only those who spend less than their household income are able to save.

Individuals who are not balancing monthly income and expenses may find themselves struggling to make ends meet.

New York vs. National
Spending vs. Saving

 

New York by Age
Spending vs. Saving

 

Planning Ahead

Individuals who have a "rainy day" fund demonstrate that they are planning ahead for their financial future. Those who lack a "rainy day" fund, however, do not have money set aside to cover expenses for three months, in case of emergencies such as sickness, job loss or economic downturn.

Individuals without this emergency savings lack a buffer against unexpected financial shocks, threatening their personal financial stability, as well as decreasing stability of the economy as a whole.

New York vs. National
"Rainy Day" Funds

 

New York by Age
"Rainy Day" Funds

 

Managing Financial Products

Numerous Americans have engaged in non-bank borrowing within the past five years, such as taking out an auto title loan or a payday loan, getting an advance on a tax refund or using a pawn shop or rent-to-own store.

Non-bank borrowing methods are likely to come with high interest rates, and often attract individuals with poor credit histories, lack of access to more traditional sources of credit, or both. Sound borrowing practices and management of financial products are crucial to financial capability.

New York vs. National
Non-Bank Borrowing

 

New York by Age
Non-Bank Borrowing

 
 

Financial Knowledge and Decision Making

Study participants were asked five questions covering concepts of economics and finance expressed in everyday life. Results were tabulated according to average number participants answered correctly, incorrectly, or "don’t know." "Don’t know" responses suggest that limited financial literacy may impede participants’ ability even to attempt to answer quiz questions.

New York vs. National
Financial Literacy

 

New York by Age
Financial Literacy

 

In addition, most Americans do not comparison shop for credit cards, indicating a gap in the application of financial decision-making skills to real life situations.

Individuals need at least a fundamental level of financial knowledge. This knowledge, paired with financial decision-making skills, can best ensure an individual’s financial capability.

New York vs. National
Comparison Shopping

 

New York by Gender
Comparison Shopping