Chicago, IL, Feb. 22, 2022 (GLOBE NEWSWIRE) -- Today, the Financial Health Network, the nation’s authority on financial health, with support from the Citi Foundation and additional funding from Principal Foundation, released Financial Health Pulse Points data from Q4 2021. The analysis shows that account balances in our sample declined by an average of $1,500 over the fourth quarter, double the $750 recorded in the same quarter of 2020. Average fourth quarter account balances were higher in 2021 than in 2020, reflecting the accumulated savings during the COVID-19 pandemic, government stimulus payments, and child tax credit payments. However, the sharp decline suggests such savings are being depleted at a much faster rate due to expiring aid programs and the rising costs of goods.
Top-line findings from Q4:
- Account balances declined more rapidly during the 2021 holiday season ($1,500) than during the same period in 2020 ($750).
- In October 2021, median monthly balances in liquid accounts were higher than in October 2020.
- People who reported experiencing financial hardship early in the pandemic saw a $986 decline in liquid account balances over Q4 2021, whereas average balances remained relatively consistent during the same period in 2020.
- Spending on eating out and recreation were up in the fourth quarter.
- In December 2021, the average monthly spending on eating out was approximately $72 (33%) higher than December 2020.
- Average monthly spending on recreation was roughly $15 (nearly 60%) higher in Q4 2021 than in Q4 2020.
“Increased spending during the holiday season is a sign of economic recovery in the wake of the pandemic, especially when compared to trends from the previous year,” said Thea Garon, senior director of the Financial Health Pulse at the Financial Health Network. “However, for those already struggling to make ends meet, declining account balances could be a cause for concern as COVID-19 economic relief efforts expire and inflation continues to drive up the costs of goods.”
In 2021, the Financial Health Pulse Trends Report found that 66 percent of Americans were not financially healthy. Financial health is determined by a composite score assessing the totality of people’s financial lives: whether they are spending, saving, borrowing, and planning in ways that will enable them to be resilient and pursue opportunities. Inflation and the upcoming expiration of more pandemic economic aid programs disproportionately affect lower-income individuals, possibly creating lasting implications for financially coping and vulnerable individuals.
Pulse Points offers regular, timely updates on financial health in America using account and transaction data from the Financial Health Pulse. These briefs supplement the annual Pulse Trends Reports released each fall, which highlight broad trends on the financial health of Americans and how they spend, save, borrow and plan. Analysis for the Pulse Points is based on transactional and account data from approximately 500 members of USC's consumer panel who agreed to share their data through a secure platform that leverages Plaid’s API.
About the Financial Health Network
The Financial Health Network is the leading authority on financial health. We are a trusted resource for business leaders, policymakers and innovators united in a mission to improve the financial health of their customers, employees and communities. Through research, advisory services, measurement tools, and opportunities for cross-sector collaboration, we advance awareness, understanding and proven best practices in support of improved financial health for all. For more on the Financial Health Network, go to www.finhealthnetwork.org and follow us on Twitter at @FinHealthNet.
About the Financial Health Pulse
The Financial Health Pulse is supported by the Citi Foundation, with additional funding from Principal Foundation. Since the inception of the initiative in 2018, the Financial Health Network has collaborated with USC’s Dornsife Center for Economic and Social Research to field the study to their online panel, the Understanding America Study. Study participants who agree to share their transactional and account data use Plaid’s data connectivity services to authorize their data for analysis.
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