Financial Capability in the U.S. Data from the State-by-State Survey Component of the National Financial Capability Study April 13, 2011

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Blaise Spencer
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1 Financial Capability in the U.S. Data from the State-by-State Survey Component of the National Financial Capability Study April 13, 2011 INFORMING TODAY S INVESTORS

2 Financial Industry Regulatory Authority (FINRA) Largest non-governmental, not-for-profit regulator of financial services industry Created through consolidation of NASD and NYSE Regulation Regulation, enforcement, education 2

3 FINRA Investor Education Foundation Mission: Provide underserved Americans with knowledge, skills and tools necessary for financial success Vision: Society characterized by universal financial literacy Action: Awards grants and manages targeted projects 3

4 Grant Programs Awarded 157 grants since 2004 Currently managing 100 grants 4 Grant Programs: General Grant Program Smart investing@your library Financial Education in Your Community Investor Advocacy Clinic Program 4

5 Direct Programs Related to Key Topics & Audiences Military Financial Education Project (SaveAndInvest.org/Military) Investor Protection Campaign for Older Americans (SaveAndInvest.org/55+) Generation Money: Financial Literacy for Teens (ChannelOne.com/GenerationMoney)

Financial Capability Study Partners: Treasury and President s Advisory Council on Financial Literacy Objective: Seek empirical evidence of combined effect of

6 Financial Capability Study Partners: Treasury and President s Advisory Council on Financial Literacy Objective: Seek empirical evidence of combined effect of knowledge, skills and attitudes on consumer behavior Three linked surveys: National Survey Military Survey State-By-State Survey 6

7 Four Key Financial Capability Components 1. Making Ends Meet 2. Planning Ahead 3. Managing Financial Products 4. Financial Knowledge and Decision-Making

8 1. Making Ends Meet Spending vs. Saving

9 1. Making Ends Meet Spending vs. Saving

10 1. Making Ends Meet 55% living paycheck to paycheck NJ = top saving state, with 49% saving DE = least likely to save, with 26% spending more than income 61% have at least some difficulty paying monthly bills and keeping up with expenses 26% overdraw their checking accounts

11 2. Planning Ahead

12 2. Planning Ahead Rainy Day Funds

13 2. Planning Ahead 31% of those with children have set aside savings for their children s college education Only one-third of those savers use tax-advantaged accounts 37% have tried to determine how much they ll need in retirement

15 3. Managing Financial Products Non-bank borrowing

16 3. Managing Financial Products Credit cards: 72% have one or more cards 56% carried a balance, paying interest each month 40% pay only the minimum due 16% have $10,000 or more in credit card debt Retirement accounts: 52% have employer plan 24% have non-employer plan 75% reported contributing regularly 26% didn t know what types of investments they have

17 4a. Financial Knowledge

18 4a. Financial Knowledge Correct Scores on 5-Question Quiz

19 4a. Financial Knowledge Interest in a savings account 78% correct Impact of inflation 65% correct How interest rates impact bond prices 28% correct Understanding mortgage terms 76% correct Risk and diversification 53% correct

22 4b. Financial Decision-Making Auto loans: 33% have an auto loan 53% did not compare terms Credit scores and reports: 42% obtained a copy of their credit report within the past year 41% checked their credit score within the past year

24 Financial Capability in the U.S. Data from the State-by-State Survey Component of the National Financial Capability Study April 13, 2011 INFORMING TODAY S INVESTORS

usfinancialcapability.org Military Survey Data at a Glance

usfinancialcapability.org Military Survey Data at a Glance Making Ends Meet A significant part of financial capability is the ability to make ends meet through adequate savings. Just over half of military