Financial Capability Study Shows Americans Making Progress but Still Have More to Learn

The following post comes from the Military Saves Blog.  Follow them on Twitter and Facebook.

August 14, 2013
by Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
Communication & Outreach

In June, the FINRA Investor Education Foundation released the results of the 2012 National Financial Capability Study.  The study was developed in consultation with the US Department of the Treasury, the President’s Advisory Council on Financial Capability, and other federal agencies and aims to evaluate what indicators of financial capability are and how they might vary across the population.  While the military component of this survey is not due out until the fall, the general survey does shed light on economic behavior in America.

More Americans Have a Rainy Day Fund

Some of the good news revealed by the study is that more Americans – 40% -- have an emergency fund compared to the last time the survey was completed in 2009.  In 2009, only 35% of Americans reported having a rainy day fund.  The sobering flip side to this is that some 56% of Americans report having no fund. 

Better Use of Credit

Thirty four percent of Americans reported only paying the minimum amount due on their credit cards, something that can negatively impact one’s credit score.  This is down from 40% in 2009.  And in 2012, 49% of Americans reported being able to pay off their credit card balance in full each month, the most desirable option since no fees or interest charges are incurred.

Financial Literacy Still an Issue

The respondents were asked 5 basic financial literacy questions relating to compound interest, inflation, risk, interest rates, and the impact a shorter mortgage term can have on total interest paid over the life of a loan.  Sixty one percent got 3 or fewer questions correct, which is 3 percentage points worse than the 2009 study.  Only 39% were able to answer four or more questions correctly.

Struggling to Make Ends Meet


According to the survey, those who report spending more than they make in income and those who are just breaking even are not considered to be saving.  In the 2012 study, 41% of respondents are spending less than they earn (and are considered to be “saving”) while 36% are just making ends meet and 19% are spending more than they earn.  In the 2009 survey, 20% reported spending more than they earn.

It will be interesting to see how the military compares to the general population.  In the 2009 survey, the military scored better than the civilian population when it came to financial literacy, but had more credit card debt than the civilian populace.  However, despite a more stable source of income, the 2009 military respondents did not seem to have a much higher instance of emergency funds.  Hopefully, servicemembers are learning from experience during these tough economic times.

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