| FOR IMMEDIATE RELEASE Apr. 12, 2010 |
Contact: Mark Leach Media Relations 817-569-2419 msleach@firstcommand.com www.firstcommand.com |
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Middle-class consumers earn solid marks in financial literacy test, First Command reports
First Command Financial Behaviors Index™ reveals that top scorers feel more financially secure and confident than average consumers
FORT WORTH, Texas – Middle-class Americans are a financially literate lot, earning an average grade of 83 percent on a new test of financial knowledge administered through the First Command Financial Behaviors Index™.
The Index’s March survey reveals that the average consumer with a household income of $50,000 or more correctly answered 7.5 out of nine questions related to general financial literacy. And three out of ten test takers earned a perfect score, said Terri Kallsen, CFP® and executive vice president of strategic development at First Command Financial Services, Inc.
“While we continue to hear reports of inadequate financial decision-making skills among some lower-income people, these test results reveal that middle-class Americans are generally quite knowledgeable about financial matters,” Kallsen said. “The relatively high level of financial literacy displayed by our survey respondents suggests that middle-income consumers are well equipped to make sound decisions about their financial futures. We have seen evidence of this financial knowledge and understanding during the recent economic turmoil as American families have increased savings and cut debt as part of a long-term commitment to a more frugal way of life.”
Our year-end 2009 report revealed that the percentage of Americans with a positive savings-to-debt ratio (i.e., the amount of total savings relative to the amount of total debt a family carries) increased five points from 37 percent in July 2009 to 42 percent in December 2009, its highest point in survey history. Spending habits among the middle class have changed, too. In our February 2010 survey, 22 percent of respondents said they have cut back for good on spending, up from 14 percent the same time last year. Consumers have been cutting back on spending in smart ways, including less reliance on credit and increased use of coupons and discount shopping opportunities.
The test results are particularly significant as they reveal a positive correlation between financial literacy and feelings of financial security and confidence. Survey respondents who earned a perfect score on the test reported the highest levels of comfort with savings and debt and confidence in their ability to retire comfortably. Interestingly, respondents who work with a financial planner reported roughly the same level of feelings of financial security and confidence displayed by the most financially literate consumers.
“The productive behaviors encouraged by financial planners provide not only the foundation for greater financial security, but boost feelings of security today and optimism for tomorrow,” Kallsen said. “The assistance of a knowledgeable and trusted Financial Advisor can encourage disciplined, lifelong behaviors that boost feelings of financial well-being and enhance long-term security for oneself and one’s family.”
For more information on the financial literacy test, including a list of questions and results, visit www.firstcommand.com/news-events/2010/04/12/financial-literacy-test.pdf.
About the First Command Financial Behaviors Index™
Compiled by Sentient Decision Science, LLC, the First Command Financial Behaviors Index™ assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 1,000 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 3.1 percent with a 95 percent level of confidence. (Note: The findings in this release are based on data from an initial sample of 659 respondents, giving the results a margin-of-error of +/- 3.8%.) www.firstcommand.com/research
About Sentient Decision Science, LLC
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index™. Sentient is a full-service market research firm with special vertical expertise within the financial services industry. Sentient specializes in advanced research design and statistical analysis of behavioral and attitudinal data.
About First Command
First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through personalized financial plans that emphasize accumulating wealth while reducing risk, First Command Financial Advisors have established lasting relationships with hundreds of thousands of client families since 1958.
First Command Financial Services, Inc. is the parent company of First Command Financial Planning, Inc. (Member SIPC, FINRA) and First Command Bank (Member FDIC). Financial planning services and investment products, including securities products are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Financial Services, Inc. Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. In certain states, First Command Financial Services, Inc. is a separately registered domestic corporation and does business in California as “First Command Insurance Services.” A financial plan, by itself, cannot assure that retirement or other financial goals