In this "What's Up, Bro?" segment from Motley Fool Answers, Alison Southwick and Robert Brokamp discuss highlights from the Federal Reserve's annual Survey of Household Economics and Decisionmaking, which is meant to provide a good barometer of how Americans are doing and how they feel about their personal finances.

It's a varied picture, with both upbeat and less-ideal points -- and in fact, variability within household income is a pretty common theme, and a problem for many families. Watch to learn more.

A full transcript follows the video.

This video was recorded on June 12, 2018.

Alison Southwick: So, Bro, what's up?

Robert Brokamp: Well, Alison, on May 22nd, the Federal Reserve released the responses to the fifth annual Survey of Household Economics and Decisionmaking, known as the SHED.

Southwick: The Fed SHED?

Brokamp: Yes. I've never heard anyone refer to it as such, but why would you not? Of course you should. Anyways, responses were collected from more than 12,000 individuals completing an online questionnaire last November and December. That's actually twice as many people as responded previously. I don't know, I guess it's becoming popular or something. Whatever. It's 66 pages long, so I'm going to go through each page and highlight my three favorite points.

Southwick: Please do, yes.

Brokamp: Not really. But, here are a few of the things that at least I found interesting. The good news is, when asked about their finances, 74% of adults said they were either doing OK or living comfortably in 2017. That's 10% higher than the first survey in 2013.

Southwick: Wow, not bad!

Brokamp: So, every year, more and more people are saying, "Yeah, I'm doing alright." Here's how the nation's income shakes out. Over one-quarter of adults had less than $25,000 of family income -- yeah, during 2017, and nearly two-fifths had less than $40,000. At the other end, 26% of households have income of $100,000 or more. Gives you an idea of where you fall. Nearly half of adults age 22 and older currently live within 10 miles of where they lived in high school, which I found very surprising. It called to mind an excellent Bloomberg article I read that found that, as a workforce, we're becoming less mobile, and it's becoming a problem, because there are all these towns that, maybe, the plant shuts down. Back in the day, it used to be that you would just sell your house or pick up and move. People are less willing to do that. So, what do you do, as a state? Do you then try to bail those people out? Or do you say, "Tough luck, that's just what happens"? Anyways. People are less likely to move, and the people who do move tend to be happier. So, that's something to consider.

Three in ten adults have family income that varies from month to month. One in ten adults experience hardship because of monthly changes in income. There are a lot of people out there who have to do some budgeting to figure all that out. Nearly 25% of young adults under the age of 30, and 10% of all adults, have received some form of financial support from outside the home. A lot of people not quite making it without help from Mom or Dad or somebody else.

This stat gets brought up every time the survey gets done, and it doesn't improve all that much, and that is: four in ten adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. In other words, they don't have a very big emergency fund.

Southwick: And yet, so many people feel like they're doing OK.

Brokamp: Right, exactly. It's not news that there is quite a bit of disparity in the economy these days between people who are doing very well, but there are some people who are still struggling. Over one-fifth of adults are not able to pay all their currents month's bills in full, so they have to rely on credit cards or something else. Over one-fourth of adults skipped necessary medi-care in 2017 due to being unable to afford the cost.

For a lot of these people, they might benefit by doing some sort of budgeting. So, the survey did ask, how did people track their spending and budgeting. You could choose more than one response. By far, the No. 1 response, 59%, was the good old spreadsheet, followed by 46% of people who use paper. So, that's how most people are tracking their expenses. Coming in third was their bank's electronic format. A lot of people are setting up automatic bill pay or tracking their spending that way. Only 16% of people use anything like Mint, Personal Capital, You Need a Budget, which I found a little surprising. I know a lot of people here at The Motley Fool rely on Quicken or something like that. But, overall, in the overall economy, it's only 16% of people.

Rich Engdahl: What was the number of people who said, nothing?

Brokamp: Well, this was just a survey that asked how people did it. That's a really good question. I'm sure, in this survey, there's a question --

Southwick: There's a very large number of people who are like, "Eh, I don't. Other."

Brokamp: [laughs] Exactly, other, nothing, nada. Pray, I pray every month. So, we've had a few discussions in recent episodes about paying for college. Here's what the SHED has to say about that. Just over half of those who attended a for-profit institution said that they would have attended a different school if they could go back and change it, as opposed to less than one-quarter of those who attended a not-for-profit institution. Also, over half of college attendees under age 30 had some debt to pay off from their education, and among those making payments on their loans, a typical monthly payment is $200-300 a month.

Southwick: That's pretty significant.

Brokamp: That is significant. It's a car payment. Nearly one-fourth of borrowers who went to for-profit schools are behind on their loan payments, versus less than one-tenth of borrowers who went to public or private not-for-profit institutions. We've talked a lot about choosing the right school for you. It definitely looks like the people who are choosing the for-profit schools are struggling, and they regret the decision.

Now, onto one of my favorite topics, retirement. Less than two-fifths of non-retired adults think that their retirement savings are on track.

Southwick: You said less than one-fifth?

Brokamp: Less than two-fifths.

Southwick: Less than two-fifths of people are on track for retirement?

Brokamp: Well, they think. It's just their own opinion.

Southwick: They think!

Brokamp: What do they know? Anyways, most people are concerned about their retirement. One-fourth have no retirement --

Southwick: [laughs] The rest are delusional.

Brokamp: [laughs] It's funny, because when you dig into some of these, like, "Have you done anything to do with retirement planning?" They'll say yes, and then you dig into it, and it's like, "I used a retirement calculator once," or, "I took an educated guess," or something like that. Anyways, we do know that, at least, according to this survey, one-fourth have no retirement savings or pension whatsoever. So, they're struggling.

Three-fifths of non-retirees with self-directed retirement savings accounts, such as 401-K, an IRA, something like that, have little or no comfort in managing their investments. We've talked about this before, too. To a certain degree, the whole 401-K system is reliant on people doing their jobs, coming home, and becoming an investment expert, as well.

Southwick: Right, their second job.

Brokamp: But a lot of people are not comfortable with it. Expressed comfort in financial decision-making may or may not correlate with actual knowledge about how to do so, so to assess how much people know about financial literacy, they gave a little five-question quiz. And I thought I'd give you guys this quiz to see how you do.

Southwick: Putting us on the spot, but ...

Brokamp: I think it's pretty easy.

Southwick: Alright, OK.

Brokamp: We'll see what happens. This is true or false: housing prices in the United States could never go down.

Southwick: Oh, false.

Engdahl: Hmm, I think I'll have to go with Alison on this, false.

Brokamp: Yes. Well, 60% of people got that one right. 19% got it incorrect and 22% didn't answer. No. 2: buying a single company's stock usually provides a safer return than a stock mutual fund.

Southwick: False.

Engdahl: If it's the right stock ... False.

Brokamp: Yes. 46% of people got that right, which means most people didn't get it right or they chose not to answer, or chose "don't know." No. 3, imagine that the interest rate on your savings account was 1% per year, and inflation was 2% per year. After year one, how much would you be able to buy with the money in the account? More than today, exactly the same, or less than today?

Southwick: Inflation is 2% and I'm getting 1%? OK, then I can afford less.

Engdahl: Less! This is an easy quiz!

Southwick: See, I was worried it was going to be like, "Your 401-K gets on a train leaving Cleveland at 40 miles an hour. At the same time, a Roth IRA ... " You know?

Brokamp: [laughs] So, 62% of people got that right.

Southwick: Maybe I spoke too soon, there's still one more question.

Brokamp: One more question.

Southwick: Here we go.

Brokamp: Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? More than $102, exactly $102, or less than $102?

Southwick: Oh, more than $102.

Engdahl: Is it an African or a European savings account?

Brokamp: [laughs] Monty Python reference, right?

Engdahl: I'm with Alison once again.

Brokamp: Yes. 56% of people got that right.

Southwick: OK.

Brokamp: So, total, the average score, people got 2.8 right. Only 20% of people got them all right.

Southwick: If our listeners did not get a 100% of those right, I will be very disappointed in you! I need you to stay after class!

Brokamp: Yeah.

Southwick: Was that too harsh? I'm sorry. I'm sorry! No, you're fine!

Engdahl: We have very elite listeners here.

Southwick: We're here to learn together!

Brokamp: That's right. Anyways, the point is, as a country, we could step up our financial literacy.

Southwick: You think? [laughs]

Brokamp: Yeah, you think? [laughs] And there's no question that it's good for your bottom line. Basically, my key takeaways from the Fed SHED are these. No. 1, the economy's actually in pretty good shape right now. Unemployment is low, tax rates are low, wage growth has actually ticked up, and banks are actually paying interest on savings, so now is a great time to improve your situation, start building an emergency fund, and start saving for retirement.

No. 2, it's always a good idea to become smarter about managing your money. Generally speaking, studies show that people who know more about money have more money and they're less prone to make financial mistakes. So, pick up some good books, read some financial websites, and, I don't know, maybe listen to a good financial podcast.

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