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Texas 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 Texas, 16% 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 22% 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.

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Planning Ahead

Many Americans are not planning ahead for their financial future. In Texas, 51% 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.

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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 Texas, 33% of individuals reported using one or more non-bank borrowing methods (e.g. payday loans) in the past five years. Additionally, 35% of those with credit cards paid only the minimum on their credit cards during some months in the last year; and 7% 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.

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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 Texas, 73% are unable to answer more than three of the five questions correctly. Also, most Americans do not comparison shop for credit cards, with 62% 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.

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Summary Table

Making Ends Meet

Texas vs. U.S.

2015 Spending vs Saving

TXUS
Spend less40.80% 40.48%
Break even38.19% 37.88%
Spend more16.05% 17.83%

Texas vs. U.S.

% Spent More Than Income

TXUS
200917.78% 19.53%
201218.82% 18.54%
201516.05% 17.83%
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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.

Texas vs. U.S.

2015 Medical Bills Overdue

TXUS
Have medical debt22.48% 20.78%
No medical debt74.92% 76.63%

Texas vs. U.S.

% Have Medical Bills Overdue

TXUS
201230.11% 25.85%
201522.48% 20.78%
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With the high costs of medical care many Americans face significant medical bills in addition to their typical monthly expenses, even for some of those with health insurance. Medical bills that become past due can also hurt one’s credit score.

The piling up of medical debt can make it even harder for Americans to make ends meet today and to plan their financial future.

Planning Ahead

Texas vs. U.S.

2015 Rainy Day Funds

TXUS
Have fund43.49% 46.00%
No fund51.17% 49.57%

Texas vs. U.S.

% Have Rainy Day Fund

TXUS
200934.18% 35.32%
201236.98% 39.85%
201543.49% 46.00%
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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 the stability of the economy as a whole.

Managing Financial Products

Texas vs. U.S.

2015 Non-Bank Borrowing

TXUS
Used Non-Bank Borrowing33.27% 25.51%
Didn't use65.28% 73.14%

Texas vs. U.S.

% Use Non-Bank Borrowing

TXUS
201237.99% 28.33%
201533.27% 25.51%
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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, 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.

Texas vs. U.S.

2015 Paid Minimum on Credit Cards

TXUS
Paid minimum34.58% 32.37%
Paid full50.53% 52.44%

Texas vs. U.S.

% Paid Minimum on Credit Cards

TXUS
200940.08% 39.57%
201234.43% 34.26%
201534.58% 32.37%
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By only paying the minimum amount due each month on a credit card, consumers are increasing their borrowing costs. This practice can also negatively impact one’s credit score.

Consumers must understand how to manage credit and that paying only the minimum on credit cards can result in a long-term drain on their finances and borrowing ability.

Texas vs. U.S.

2015 Home Equity

TXUS
Underwater6.86% 9.32%
Not underwater85.39% 84.10%

Texas vs. U.S.

% Have Home Underwater

TXUS
201215.66% 14.48%
20156.86% 9.32%
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Having an underwater mortgage, meaning the balance on a mortgage is higher than the value of a home, can keep many Americans away from the key financial benefits of owning a home. If an individual has an underwater mortgage, they will have to pay the difference if they sell their home, and may find refinancing their mortgage difficult.

When one enters into a mortgage contract, it is critical to realistically consider both mortgage payments relative to income and to understand the impact that volatility in the housing market can have on the value of one’s home.

Financial Knowledge and Decision-Making

Texas vs. U.S.

2015 Financial Literacy

TXUS
3 or fewer correct72.98% 63.05%
4 or more correct27.02% 36.95%

Texas vs. U.S.

% 3 or Fewer Correct

TXUS
200958.05% 57.81%
201266.53% 61.14%
201572.98% 63.05%
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Study participants were asked five questions covering aspects of economics and finance encountered in everyday life, such as compound interest, inflation, principles relating to risk and diversification, the relationship between bond prices and interest rates, and the impact that a shorter term can have on total interest payments over the life of a mortgage.

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.

Texas vs. U.S.

2015 Credit Card Shopping

TXUS
Compared cards30.80% 35.02%
Did not compare62.23% 57.95%

Texas vs. U.S.

% Did Not Compare Credit Cards

TXUS
200965.94% 61.96%
201261.22% 60.61%
201562.23% 57.95%
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Most Americans do not compare offers or collect information from more than one company when shopping for credit cards. This practice suggests a gap in applying financial decision-making skills to real life situations.

Not performing basic research when shopping for credit cards can result in higher interest rates and, consequently, higher borrowing costs.