The document summarizes key findings from the 2012 National Financial Capability Study conducted by FINRA Investor Education Foundation. Some of the main findings include: - 41% of respondents spent less than their income in the past year, down slightly from 42% in 2009. - 40% of respondents said it was somewhat difficult to cover expenses and pay bills each month, unchanged from 2009. - 40% of respondents have set aside emergency funds to cover 3 months of expenses, up from 35% in 2009. - The average number of correct responses on a 5-question financial literacy quiz was 2.88, down slightly from 2.99 in 2009.

1. 1
Applied Research & Consulting LLC
•
320 West 13th Street
Seventh Floor
NYC, NY 10014
•
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

2. 2
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

3. 3
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

4. 4
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

5. 2012 NFCS
PRELIMINARY FINDINGS

6. 6
Spending vs. Saving
41%
36%
19%
Spending less than
income
Spending about equal to
income
Spending more than
income
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)

7. 7
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

8. 8
40%36%
42%43%
16%18%
20122009
Very
difficult
Somewhat
difficult
Not at all
difficult
Making Ends Meet
In a typical month, how difficult is it for you to cover your
expenses and pay all your bills?
Some-
what
difficult
42%
Not at all
difficult
40%
Very
difficult
16%
Don't
know/No
answer
2%

9. 9
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

10. 10
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?
No
56%
Yes
40%
Don't
know/No
answer
4%

11. 11
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)

12. 12
Sources of Income
50%
18%
65%
19%
77%
18%
Salaries, wages, freelance pay or tips Money from family members who do not live
in your household
HS or less Some college College or more
Sources of income by education level

13. 13
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

14. 14
Payment Methods
26%
49%
10%
4%
26%
49%
6%
1%
38% 39%
2% 0%
Credit cards Debit cards tied to a
bank account
Pre-paid debit cards Tapping/waving your
mobile phone over a
sensor at checkout
18-34 35-54 55+
Payment methods by age

15. 15
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
No
69%
Yes,
owe
more
22%
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
Underwater

16. 16
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

17. 17
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

18. 18
Don't
know/No
answer
1%
No
79%
Yes
20%
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%
No
41%Yes
54%

19. 19
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!

20. 20
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)

21. 21
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