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Use Federal Reserve Survey Questions to Test Your Household’s Economic Well Being

The United States consists of about 125 million separate households, each one with its own unique set of financial circumstances.

Some households work like economic pressure cookers; they’re overheated by delinquent loan payments, unpaid credit card balances, overdue bills, unbudgeted emergencies, nonexistent savings, and the like.

Some households run much cooler, and work more like soft serve ice cream machines. Stress is lower because typically there’s plenty of money to pay ongoing expenses. Many months, there’s even enough left over for savings (which is very cool indeed).

Economists love to study household finances. The Federal Reserve Board, for example, sponsors an annual Survey of Household Economics and Decisionmaking (SHED). SHED poses dozens of questions covering such diverse topics as savings, economic preparedness, housing decisions, auto lending, student loans, and retirement planning. The most recent SHED was released in May 2016 and reflects the answers of 5,462 respondents.

If you’re interested about whether your household works like a pressure cooker or more like a soft serve machine, SHED can SHED some light on the subject. Experts have spent countless hours composing the clearheaded questions best suited to assess economic well being. If you want, you can use these expertly formulated queries to assess your own circumstances—and as a bonus you can see how your answers compare to a representative sample of all US households.

I’ve set up a very rough scoring system to measure your fiscal well being. For each answer you provide, you receive a defined number of points. A maximum score is seventeen points; if you tally fourteen points or above, your finances probably pose little if any discomfort.

To keep the size of this quiz manageable, I’ve cherry-picked the SHED questions that reveal the most about whether you live within your means. If you want to peruse other SHED questions, visit Appendix C of the Federal Reserve’s full report by clicking here.

SHED on Bills and Loan Payments

An important test of economic well being is how a household handles recurring bills and loan installments. Pose these several questions to yourself and compare your answers to those of SHED households. For each question you answer “no,” give yourself one point for either being current with the obligation or avoiding it altogether.

Bill Payments

Question I12. In the past year, did you (and your spouse/partner) have any months where you struggled to pay your bills either because your income was unusually low or because your expenses were unusually high?
Response Percent
Refused 0.6
No 57.2
Yes 42.4
Note: Number of unweighted* respondents = 3,069

Mortgage Payments

This question as phrased is addressed to homeowners, but if you rent give yourself a point if you haven’t been late on two or more monthly payments.

Question M2. In the past 12 months, have you (or your spouse/partner) missed two or more payments on your mortgage?
Response Percent
Refused 0.3
No 95.6
Yes 4.1
Note: Number of unweighted respondents = 2,202

Student Loan Payments

Question SL6. Are you behind on payments or in collections for one or more of the student loans from your own education?
Response Percent
Refused 0.7
No 81.5
Yes 17.8
Note: Number of unweighted respondents = 712

Auto Loan or Lease Payments

Question AL2. In the past 12 months, have you (and/or your spouse/partner) missed or been late making any payments on your auto loan or lease?
Response Percent
Refused 0.2
No 91.5
Yes 8.3
Note: Number of unweighted respondents = 1,894

Medical Expense Payments

Question E2B. Do you currently have an unpaid balance or owe any debt related to the unexpected major medical expenses that you had in the past 12 months?
Response Percent
Refused 0.4
No 54
Yes 45.6
Note: Number of unweighted respondents = 1,349

SHED on Credit Card Balances

Anyone can live in harmony with their little slabs of polyvinyl chloride acetate (PVCA) provided they follow one simple rule:

pay credit cards off completely, without fail, each and every month, and never, ever carry a balance.

This rule is vitally important for your financial well being, so if your answer to the question below is “[n]ever carried a balance,” award yourself three points. Otherwise, you receive no points at all. Why? Because credit card debt creates fiscal stress unnecessarily and pointlessly—so no points for you.

Question C4A. In the past 12 months, how frequently have you carried a balance on one or more of your credit cards?
Response Percent
Refused 0.3
Never carried a balance (always pay in full) 42.4
Some of the time 19.7
Most or all of the time 31.4
Note: Number of unweighted respondents = 4,419

SHED on Emergency Spending

Since unexpected expenses happen to everyone, a well-endowed emergency fund is a key to financial serenity (in fact, this particular stash of cash might better be called an “inevitability fund”). If you don’t have an emergency/inevitability fund already in place, you should create one as soon as possible.

Emergency Fund

A “yes” answer here gets you one point.

Question EF1. Have you set aside emergency or rainy day funds that would cover your expenses for 3 months in case of sickness, job loss, economic downturn, or other emergencies?
Response Percent
Refused 0.7
No 51.9
Yes 47.4
Note: Number of unweighted respondents = 5,642

Source of Emergency Funds

This question explores various strategies for coping with an unexpected expense. Award yourself one point if you: (1) pay by credit card (provided you pay it off in full at the next statement); or (2) pay cash or with money from a checking or savings account.

Question EF3. Suppose that you have an emergency expense that costs $400. Based on your current financial situation, how would you pay for this expense? If you would use more than one method to cover this expense, please select all that apply.
Response Percent     
Refused 1.1
Put it on my credit card and pay it off in full at the next statement 28.6
Put it on my credit card and pay it off over time 17.4
With the money currently in my checking/savings account or with cash 46.6
Using money from a bank loan or line of credit 3.1
By borrowing from a friend or family member 12.6
Using a payday loan, deposit advance, or overdraft 1.9
By selling something 7.9
I wouldn’t be able to pay for the expense right now 13.9
Other (please specify) 2.1
Note: Number of unweighted respondents = 5,642

Size of Emergency Fund

At a minimum, you need to handle a $400 crisis, so award yourself a point only if you answer “[o]ver $400.”

Question EF4. Based on your current financial situation, what is the largest emergency expense that you could pay right now using cash or money in your checking/savings account?
Response Percent
Refused 1.2
Under $100 38.9
$100 to $199 15.7
$200 to $299 13
$300 to $399 8.7
Over $400 22.5
Note: Number of unweighted respondents = 2,539

SHED on Living Within Your Means

Finally, we reach the crux of frugality. Spend less than what you make, do it year in and year out, and you have great prospects for economic well being both in the present and in the future.

Spending Compared to Income

If you spend everything you earn, you’re likely experiencing financial discomfort. So award yourself one point only if your answer to the question below is “[l]ess than your income.”

Question I1. In the past 12 months, would you say that your (and your spouse/partner’s) total spending was:
Response Percent
Refused 0.5
Less than your income 50.8
The same as your income 32.6
More than your income 16.1
Note: Number of unweighted respondents = 5,376

Savings Rate

The more you’re able to sock away each year, the brighter your outlook. Award yourself one point for savings of “1 to 5 percent” and one additional point for each listed savings level above that up to a maximum of five points for having saved “[o]ver 20 percent.”

Question I2. In the past 12 months, about what percent of your (and your spouse/partner’s) total gross income (before taxes and deductions) did you set aside as savings?
Response Percent
Refused 0.9
None 30.7
1 to 5 percent 27.1
6 to 10 percent 18.6
11 to 15 percent 9.2
16 to 20 percent 6.3
Over 20 percent 7.2
Note: Number of unweighted respondents = 4,032

Retirement Plans

Award yourself one point only if you maintain at least three different types of retirement savings vehicles as listed below.

Question K2. Do you currently have each of the following types of retirement savings or pension?
Response Percent   
401(k), 403(b), or other defined contribution plan 47.9
Pension with a defined benefit 24.9
IRA or Roth IRA 27.3
Savings outside a retirement account 40.8
Ownership of real estate or land to generate income in retirement 14.5
Ownership of my business 5.7
Other retirement savings 9.9
Note: Number of unweighted respondents = 4,126

*   *   *

I hope you scored high on these fantastically formulated financial questions. If your points are lower than you like, don’t despair. The path of frugality is a great stress reliever.

The next SHED is scheduled for release in May, 2017. I’ll write a new post then.

* Because the respondents’ demographics may differ from that of the overall U.S. population, SHED survey results are weighted to match characteristics from the Census Bureau’s March 2015 Current Population Survey.

Photo by Maria Keays

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4 Responses to Use Federal Reserve Survey Questions to Test Your Household’s Economic Well Being

  1. Mrs. Picky Pincher January 9, 2017 at 6:32 AM #

    Huh. This is new to me, but it’s a great idea, so thanks! Some of these survey questions are troubling, but that’s the reality of it. Most people don’t have an emergency fund and aren’t equipped to handle emergency expenses.

    However, it’s great to see that we’re scoring pretty well on these. A year ago we would have been up a creek without a paddle here. But it’s a great way to see what more we could do to secure our finances.
    Mrs. Picky Pincher recently posted…What A Frugal Weekend!My Profile

    • A Noonan Moose January 9, 2017 at 9:45 AM #

      SHED likely costs more than a million tax dollars to produce each year. But it gives a solid return on investment by identifying some possible causes of this country’s gross domestic unhappiness.

  2. Kraken Fireball January 10, 2017 at 6:31 PM #

    Sometimes I feel like I live in a bubble, stuff like this is a good way to pop it and bring me back to reality. My friends and family are financially savvy and I read a bunch of finance blogs. Most of the time I forget that the majority of people don’t have an understanding of finances like the people I surround myself with. Reading the SHED questions I found myself saying “wait this only goes up to 20% savings rate” and “Emergencies are much more expensive than $400.”
    SHED is definitely worthwhile research, in my opinion. Understanding the financial situation of households in America can, ideally, help improve them.Thanks for cherry picking these questions for us!
    Kraken Fireball recently posted…Don’t Quit Your Day JobMy Profile

    • A Noonan Moose January 10, 2017 at 8:18 PM #

      Thanks for stopping by again KF!

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