Financial Anxiety in Low- and Moderate-Income Households: Findings From the Household Financial Survey

Despite significant gains in the U.S. economy following the Great Recession, finances remain a common source of stress for many American households. In 2016, 52% of U.S. workers reported that their financial position made them stressed, and research reveals that stress and anxiety associated with finances are particularly common among low-income Americans. In this brief, we explore the topic of financial anxiety, particularly its relationship to demographic and financial characteristics, measures of hardship, and financial behaviors. We find that financial anxiety is strongly linked to the overall levels of debt and assets held by low-income households, as well as their ability to access resources in an emergency, but is not closely linked with income measures. Households incapable of saving due to their expenses and those experiencing material hardships also have higher levels of financial anxiety. Policymakers and program designers could help address this issue in several ways. For example, they might work to expand access to programs intended to provide financial slack to low-income households; assistance in building emergency savings and access to low-cost credit products would improve slack in these households while improving protection against income and expense volatility and its associated stresses.

Project: Refund to Savings (R2S)