Federal Reserve Speeches·May 20, 2026, 9:15 AM ET

Barr, Measuring Financial Health

Financial health has evolved from a focus on expanding access to prioritizing better outcomes for American families through research, technology, and improved metrics.
While 96 percent of American adults have bank accounts, only 31 percent report feeling financially healthy, highlighting that access alone does not guarantee positive outcomes.
The Federal Reserve tracks financial health via the triennial Survey of Consumer Finances (SCF) for quantitative data & the annual Survey of Household Economics and Decisionmaking (SHED) for qualitative insights.
The SHED metric known as the "$400 test" reveals that 37 percent of households cannot cover an unexpected $400 expense, indicating significant vulnerability to economic shocks.
Technological advances, including artificial intelligence, now enable financial institutions to analyze transaction data for granular, real-time assessments of customer financial health.
Measuring financial health helps firms design products that increase savings buffers, reduce overdrafts, & improve credit scores while identifying vulnerable customers before crises occur.
Evidence suggests financially healthy customers cost less to serve due to reduced customer service usage & lower delinquency rates, aligning consumer well-being with institutional profitability.
Challenges to scaling financial health metrics include establishing measurement standards, balancing data access with consumer privacy, maintaining methodological rigor, & ensuring data is actionable for consumers.
Effective financial health strategies require pairing metrics with products that address income volatility, behavioral biases, & the complexity of financial tools for lower-income households.
Achieving broader impact requires collaboration among financial institutions, technology vendors, nonprofits, & independent evaluators to prioritize vulnerable customers & standardize data practices.