Bank data shows financial stress impacting their health, with consumers missing food, safe housing, doctor’s visits, medication, and/or mental healthcare over the past six months.
Varo Bank, N.A., the first nationally-chartered consumer techbank in the U.S., announced the release of new data about paycheck-to-paycheck consumers, the “Wealth Watch Insights” report, in its quest to understand more about the challenges and obstacles facing this frequently overlooked audience. The data makes for grim reading by the US financial services industry, especially as 35% of respondents reported that financial stress had a negative impact on their physical health within the past six months.
Authored by Morning Consult and the THRIVE Financial Empowerment Center, this new report offers a window into the views of those struggling to keep their heads above water when balancing their personal finances. U.S. adults across generations, geographical regions, education levels, employment sectors, ethnicities, and more are represented in the data.
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Key Findings
- Trust in Banking Has Plummeted: An overwhelming 74% of respondents believe that the US financial services industry is “rigged against the poor,” creating a feedback loop where good-faith attempts to improve the system in the future might not be trusted.
- Financial Stress Leads to Damaging Mental and Physical Health: 40% of respondents have had financial stress leading to impacted mental health, with 15% not receiving proper mental health care due to cost. This has led to more than 1 in 5 people (21.5%) self-medicating and more than 1 in 7 people (15.6%) considering self-harm due to stress.
- Women are Significantly More Impacted: Of those screened as living paycheck-to-paycheck for this survey, 3 of 5 (59%) identified as women, and of all who identified as financially fragile (could not get $2,000 in 30 days if needed), 2 of 3 (67%) were also women.
- Financial Pressure is Pervasive Across Personal Politics: Democrats, Republicans, and Independents all had more than 30% representation in this survey, and each group cited the daily cost of living (food, transportation, rent, child care) as their greatest financial concern.
- Financial Hardship Crosses Education Lines: With 52% of respondents having less than a College-level education completed (29% have a Bachelor’s and 19% completed Graduate School), the difficulties of living paycheck to paycheck affect the post-graduate class as much as those without a degree.
- Generational Pressure is Real: As fingers are pointed at which age groups are responsible for economic downturns with articles and rhetoric, 38% of Gen Z respondents (Gen Z: Born between 1997-2012) have avoided asking for financial help due to shame and embarrassment.
“Rent is pretty high. Rent is going up. So that can be a struggle sometimes because even though all my bills are paid, sometimes I’m living paycheck-to-paycheck,” said Adriana Cubillo, 25, a Varo customer from Modesto, CA. “I’ve been working more and more overtime. There are pros and cons to working overtime because it’s less time for my social life, my family time … I missed out on birthdays and get-togethers.”
“These findings not only unveil the depth of financial struggles faced by many Americans, but they also underscore the profound link between financial stability and overall well-being,” said Colin Walsh, CEO at Varo Bank. “This data shows why creating innovative technology that helps people living paycheck-to-paycheck build positive cash flow, strong credit and savings for a brighter future is more important than ever.”
Varo Bank will share additional Wealth Watch Insights reports in the coming months to better understand the difficulties faced by those living paycheck-to-paycheck and will share those responses with the banking community at large.
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