The financial health of consumers struggling to recover from the recession is closely linked to the
complexity of their personal financial situations, according to new research released today by Aite Group and
. The survey of 1,242 U.S. consumers titled,
“How Have Americans' Financial Lives Rebounded From the Recession?”
provides an in-depth look at how consumers fared during the recession and the steps they took to improve their financial situations.
Financial complexity and financial health are closely intertwined, the survey found. Of those surveyed whose financial health has declined since the recession, 31 percent said their financial life is very complex, citing a variety of financial penalties and multiple loans. Yet, of those who say their financial health has improved since the recession, 43 percent say the complexity of their finances has decreased.
Borrowing from a variety of sources also increases the complexity of consumers’ financial lives. In fact, the survey showed that half of the consumers whose financial health declined post-recession borrowed from friends and family in 2012, up from 34 percent in 2008. In addition, the percentage of those who took out payday loans, direct deposit advances and small loans increased from 2008 to 2012. Conversely, the survey found that borrowing activity remained relatively stable among those whose financial health improved post-recession.
“Reducing financial complexity is crucial for consumers looking to recover from the recession,” said Aite Group senior analyst Ron Shevlin. “Consumers who borrow from multiple sources find their financial lives to be complex, but those who use tools to help them manage their spending and borrowing make progress in simplifying their finances.”
Increased Financial Discipline and Literacy
The survey showed that the recession caused many consumers to be more disciplined about their finances and consider accepting more financial advice than before.
- Two-fifths of respondents said they are saving more today than they did during the recession.
- Among the roughly quarter of consumers who say their financial health has improved since the recession, approximately 60 percent pay their credit card balance in full nearly every month. That is up significantly from 2008, when 43 percent paid their balance in full.
- Fifty-five percent consider themselves to be financially literate today, a 14 percent increase from 2010.
- Forty percent used tools provided by their financial institution or talked with their financial institution to help them manage their finances.
- However, among consumers whose financial health declined post-recession, one in three say they consider themselves financially illiterate.
- In contrast, only 12 percent of consumers whose financial health improved or stayed the same said they were financially illiterate.
“The recession was a challenge for all Americans, but with challenges lessons are learned and we are very encouraged to see the increase in financial discipline and literacy,” said Tom O’Donnell, Chase’s senior vice president of Quality. “At Chase we’re dedicated to understanding our customers’ spending and borrowing habits in order to continually improve our products to meet their needs.”