The Financial Industry Regulatory Authority Foundation released a study that shows how vulnerable finances are for American renters. The study also placed Alaska in the top five of renter’s states in the nation.
The study compared the finances of those who rent and those who own their own homes. 50 percent of renters are financially fragile however, only 21 percent of homeowners have shaky finances.
FINRA Investor Education Foundation research director Gary Mottola coauthored the study and says he looked at the financial capability and literacy of renters in America.
“The research paper actually examines the renter behavior relative to homeowner behavior at the national level. At the national level what we find is renters are financially fragile they exhibit low levels of financial literacy and they lack emergency savings. In addition they are also more prone to experience income shocks and essentially this is a dangerous combination because it can inhibit their ability to respond to financial emergencies.”
On the national scale, 24 percent of renters said it was very difficult to cover their monthly bills, that’s double the percent of homeowners that said the same thing. 50 percent of homeowners have some kind of emergency fund whereas only 22 percent of renters reported having enough money saved to cover their expenses for three months in the event of sickness, job loss or other emergency.
However, as far as renters go, Mottola says Alaska’s renters are doing very well.
“In our survey we ask how difficult it is to make ends meet. When you look at renters nationally almost a quarter says it’s very difficult to make ends meet. When you look at renters in Alaska, only about 16 percent say it’s very difficult to make ends meet—that’s a pretty significant drop.”
He says there are several possible reasons for the increase in renter security in Alaska.
“Some of it could be demographic reasons, this study didn’t compare, didn’t look at the ability to make ends meet based on demographic. So it’s possible that renters in Alaska are doing a little bit better than renters nationally. And that is true, the profile is pretty much the same. In other words when you compare Alaskan renters to Alaskan homeowners you see that they’re doing worse financially, but again demographically when you compare Alaskan renters to national renters there’s slightly higher income and slightly higher financial literacy.”
Mottola says Alaska as a whole, renters and homeowners, has one of the highest financial literacy rates in the country. That means Alaskans are among some of the smartest with the handling of their money and how to save and invest properly.