Some Arkansans still having hard time making ends meet, FINRA survey says

More Arkansans are having difficulty making ends than most of the rest the nation, with nearly one out of three consumers in the state struggling with unpaid medical bills, experiencing overdrawn checking accounts or needing to resort to non-bank borrowing such as an auto title or payday loan, pawn shop or rent-to-own retailer.

Those were some of the key findings culled from the National Financial Capability Study (NFCS), released July 12 by the FINRA Investor Education Foundation. The study measures four key components of financial capability: making ends meet, planning ahead, managing financial products, and financial knowledge and decision making.

Drawing on a data set comprising responses from more than 27,000 U.S. adults, the NFCS is one of the largest and most comprehensive financial capability studies in the country.

“This research underscores the critical need for innovative strategies to equip consumers with the tools and education required to effectively manage their financial lives,” said FINRA Foundation Chairman Richard Ketchum. “My hope is that policymakers, researchers and advocates will use these findings to make more informed decisions about how to best reach underserved populations.”

The NCFS is part of a large-scale, multi-year project that provides a broad understanding of financial capability and behaviors in the United States. The first study was conducted in 2009, then in 2012 and in 2015, and boasts one of the nation’s most inclusive and in-depth representations of age, race, education and gender on these topics.

In addition, the data set allows for state-by state comparisons of financial literacy, making it valuable to policy makers interested in better understanding the level of financial capability in their states.

Besides having difficulty making ends meet, Arkansans also fell below the rest of the nation in how well they managed finances. Surprisingly consumers in Arkansas, fared better and favorable to the rest of the nation in planning ahead for retirement and their level of financial knowledge and decision-making.

Following are some of the study’s most significant findings.
• In Arkansas, 20% 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 34% of individuals reported having medical bills that are past due.

• More than one in five Americans (21%) have unpaid medical debt, and women are more likely than men to put off medical services due to cost, such as seeing a doctor, buying needed prescriptions or undergoing a medical procedure.

• Nearly half of respondents with a high school education or less could not come up with $2,000 in 30 days in the event of an emergency (45%) compared to only 18% for respondents with a college degree.

• Twenty-nine percent of 18- to 34-year olds with a mortgage have been late with a mortgage payment, compared with seven percent for the 55+ age group.

• Hispanics and African-Americans are much more likely to use high-cost forms of borrowing like pawn shops and payday loans compared to whites (39% for African-Americans, 34% for Hispanics and 21% for whites).

• Only 37% of respondents are considered to have high financial literacy, meaning they could answer four or more questions on a five-question financial literacy quiz, down from 39% in 2012 and 42% in 2009.

• The percentage of respondents reporting no difficulty in covering monthly expenses and bills has increased from just over a third in 2009 (36%) to nearly half in 2015 (48%), and the percentage of respondents with emergency funds has increased from 35% in 2009 to 46% in 2015.