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Applied Research & Consulting LLC

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320 West 13th Street

Seventh Floor

NYC, NY 10014

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Tel. 212.226.1007

Fax. 212.226.0240

E-mail. arc@arcllc.com

June 21, 2013

FINRA Investor Education Foundation 2012 National Financial Capability Study

Presented to the NJ Coalition for Financial Education (NJCFE) Dr. Barbara O’Neill, Rutgers Cooperative Extension

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National Financial Capability Study • Goal—Benchmark and better understand financial capability

in America

• Designed by multi-disciplinary team of researchers, policy-makers and subject experts

• Baseline study conducted in 2009

– National Survey: Nationally projectable telephone survey of 1,488 American adults

– State-by-State Survey: Online survey of approximately 28,146 respondents (roughly 500 per state + DC)

– Military Survey: Online survey of 800 military personnel and spouses

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2012 NFCS Goals • Conduct second wave of State-by-State and Military

Surveys

• Update survey content while preserving key tracking measures

• Improve utility of Military Survey

– Boost representation of younger service members

– Supplement sample with military personnel from State-by-State Survey

– Collaborate with DoD to match respondent classification questions

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2009 NFCS Impact • Twenty one publications

– Peer-reviewed journals

– White papers

– Issue briefs

• Dozens of citations – Media: Wall Street Journal, US News and World Report, Today Show

– Government reports: GAO, President’s Advisory Council on Financial Capability

– Congressional testimony: Professor Lusardi, FINRA Foundation

• Top-tier researchers – Urban Institute, Federal Reserve, Social Security Administration

– Dartmouth, Wharton, Wisconsin-Madison, and more

2012 NFCS PRELIMINARY FINDINGS

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Spending vs. Saving

41%36%

19%

Spending less thanincome

Spending about equal toincome

Spending more thanincome

Over the past year, would you say your spending was less than, more than, or about equal to your income?

42% (2009)

35% (2009)

20% (2009)

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Spending vs. Saving

Top 5 states Bottom 5 states

1 District of Columbia 47.0% 51 Idaho 34.3% 2 New Jersey 46.5% 50 Wyoming 34.5% 3 California 45.7% 49 Oklahoma 35.9% 4 Massachusetts 45.5% 48 Rhode Island 36.0% 5 Florida 44.0% 47 West Virginia 36.1% US Average 40.9% US Average 40.9%

Spending less than income by state

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40%36%

42%43%

16%18%

20122009

VerydifficultSomewhatdifficultNot at alldifficult

Making Ends Meet In a typical month, how difficult is it for you to cover your expenses and pay all your bills?

Some-what

difficult42%

Not at all difficult40%

Very difficult16%

Don't know/No answer

2%

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43%33% 33%

48%

32%

20%10%

18%19%15%

Making Ends Meet Difficulty covering expenses and paying bills by ethnicity

Very difficult

Not at all difficult

White Black Hispanic Asian Other

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40%35%

20122009% Yes

Emergency Funds Have you set aside emergency or rainy day funds that would cover your expenses for 3 months, in case of sickness, job loss, economic downturn, or other emergencies?

No56%

Yes40%

Don't know/No answer

4%

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Sources of Income

63%

24%

19%

19%

19%

14%

13%

Over the past 12 months, did you receive any of the following types of income?

Salaries, wages, freelance pay or tips

Social Security retirement benefits

Other federal or state benefits (e.g., unemployment, disability, SSI, TANF)

Payments from a pension plan

Money from family members who do not live in your household

Income from a business

Withdrawals from retirement accounts (e.g., 401(k), IRA, Keogh)

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Sources of Income

50%

18%

65%

19%

77%

18%

Salaries, wages, freelance pay or tips Money from family members who do not livein your household

HS or less Some college College or more

Sources of income by education level

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46%

35%

33%

30%

15%

6%

5%

2%

26%

33%

55%

35%

54%

17%

20%

5%

26%

30%

10%

33%

29%

75%

73%

91%

Payment Methods How often do you use each the following methods to make payments (e.g., for shopping, for paying bills, or for any other purposes)?

Debit cards tied to a bank account

Online payments directly from your bank account

Cash

Credit cards

Paper checks

Pre-paid debit cards

Money orders

Tapping/waving your mobile phone over a sensor at checkout

Frequently Sometimes Never

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Payment Methods

26%

49%

10%4%

26%

49%

6%1%

38% 39%

2% 0%

Credit cards Debit cards tied to abank account

Pre-paid debit cards Tapping/waving yourmobile phone over asensor at checkout

18-34 35-54 55+

Payment methods by age

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All respondents

Homes Underwater

22% of respondents

who owe money on their

homes are underwater

14% of homeowners are underwater

8% of U.S. adults are underwater

No69%

Yes, owe more22%

Don't know/No answer

8%

Do you currently owe more on your home than you think you could sell it for today?

[among respondents who owe money on their homes]

All home- owners

Those who owe money

on their homes

Underw

ater

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Foreclosure & Bankruptcy

3%4%

2009 2012% Yes

Have you been involved in a foreclosure process on your home in the last 2 years?

Have you declared bankruptcy in the last 2 years?

2%

4%

2009 2012% Yes

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Yes 26% No

71%

Don't know/No answer

3%

Medical Debt Do you currently have any unpaid bills from a health care or medical service provider (e.g., a hospital, a doctor's office, or a testing lab) that are past due?

31% 30%

17%

32%

24%

11%

18-34 35-54 55+

Medical Debt No Health Insurance

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Don't know/No answer

1%

No79%

Yes20%

Student Debt Do you currently have any

student loans? Are you concerned that you might not be able to pay off your student loans?

[among respondents with student loans]

Don't know/No answer

5%

No41%Yes

54%

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Financial Literacy Five financial literacy quiz questions:

• Interest rate question

• Inflation question

• Bond price question

• Mortgage question

• Risk question

Number of correct answers 2009 2012

None 7% 7%

One 11% 12%

Two 17% 19%

Three 24% 23%

Four 27% 25%

Five 15% 14%

Average number correct 2.99 2.88

Take the NFCS Knowledge Quiz and see how much you know!

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New Jersey: Capable But Clueless? CA, MA, NJ residents are most financially capable

Ranked in top 5 of all states in at least 3 of 5 measures of financial capability

Making ends meet

Planning ahead

Managing financial products

Financial Knowledge and decision-making (includes quiz)

Average quiz score for NJ of 2.82 versus national average of 2.88 (out of 5)

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NFCS Online Resources FINRA NFCS Web site: http://www.usfinancialcapability.org/

• Downloadable NFCS data: http://www.usfinancialcapability.org/downloads.php

• 2009 and 2012 comparison of national data: http://www.usfinancialcapability.org/results.php?region=US

• NFCS Quiz: http://www.usfinancialcapability.org/quiz.php

• Press release about NJ NFCS findings: http://www.finra.org/web/groups/corporate/@corp/@news/@newrel/documents/newsrelease/p269887.pdf