By Patricia Uceda, Fall 2014 Graduate Research Assistant
The FINRA Investor Education Foundation recently conducted a study comparing demographic, behavioral, and psychographic profiles of renters versus homeowners and found that renters were much more financially at risk then homeowners due to a variety of factors. Typically, renters tend to be more burdened by debt and lack emergency savings. In addition, they exhibit lower levels of financial literacy. As a result, they are more likely to experience financial challenges and are not as well-equipped to handle them.
The data revealed by the 2012 National Financial Capability Study showed that 74% of renters have household incomes below $50,000, contrasted with just 41% of homeowners. In addition, only 39% of renters are married, compared with 63% of homeowners. Despite being less likely to be married, renters are more likely to have dependent children in their households. Renters are also twice as likely as homeowners to be unemployed, and are less likely to be college educated. When questioned about how difficult it was for the respondent to pay their expenses and bills each month, 24% of renters found it very difficult, compared to only 12% homeowners.
Given that 36% of America live in rented homes, these statistics are certainly concerning. The FINRA Investor Education Foundation has identified several characteristics that renters tend to share in an effort to begin increasing targeted financial education efforts towards renters. Stay tuned this week for a quick look at some of these typical renter characteristics.