The state-by-state survey found a significant disparity in financial capability across state lines and demographic groups:
- Citizens of New York, New Jersey and New Hampshire are the most financially capable. Those states ranked in the top five among all states in at least three of five measures of financial capability.
- Kentucky and Montana stood out as having lower financial capability when compared to other states. Citizens of both states were among the least financially capable in at least three of five measures of financial capability.
- Young Americans nationally were more likely to be less financially capable than older Americans, and they were significantly more likely to engage in non-bank borrowing.
The state-by-state survey echoed several of the findings of a smaller-scale national survey released in 2009, finding:
- Over half of all Americans are living paycheck-to-paycheck. 55 percent of Americans report spending more than or about equal to their household income.
- A significant majority of Americans (60 percent) do not have a “rainy day” fund to cover three months of unanticipated financial emergencies.
- More than one in five Americans (24 percent) have engaged in some form of higher cost non-bank borrowing during the last five years, including taking out a payday loan or getting an advance on a tax refund.
- Americans, on average, were able to correctly answer just three of five questions about fundamental financial concepts.
Findings released today, along with findings from a survey of military members that was released in October 2010, complement data from the National Financial Capability Study, which was released in late 2009. The new data will help guide FINRA Foundation financial education initiatives across the country by giving insight into the regional, age and gender variations in how Americans save, borrow and plan for their future. The findings will be especially useful in informing FINRA Foundation-funded community-based organizations about the financial education needs of different demographics in their communities.
The findings emphasize the need for Americans to take greater charge of their financial well-being by forecasting future financial needs, navigating increasingly complex financial markets and managing risk. The state-by-state results highlight how many Americans are disadvantaged by their lack of financial capability, and break down financial decisions and literacy by gender, age bracket and region.
The study was developed in consultation with the U.S. Department of the Treasury and the President’s Advisory Council on Financial Literacy, and represents an unprecedented collection of data on financial behaviors across all 50 states.
Note: The CAFLM blog will feature California survey results in our blog on December 9. Stay tuned!