Results from the National Financial Capability Study (NFCS) were released in July, 2016 by the FINRA Investor Education Foundation (FINRA Foundation). The findings, which include data from more than 27,000 U.S. adults, reiterate the importance of providing people with financial education to help them better manage their money.
According to an infographic that depicts the study’s results, “Absolute levels of financial literacy are low and financial literacy is slightly down since 2009.” The term “absolute” refers to one’s ability to answer four or five basic questions correctly on a five-question financial literacy quiz.
Significant findings:
- More than one in five Americans (21%) have unpaid medical debt.
- Women are more likely than men to put off medical services, such as seeing a doctor, filling prescriptions, or undergoing a medical procedure, due to cost.
- Nearly half (45%) of respondents with a high school education or less could not come up with $2,000 in 30 days in the event of an emergency, whereas most respondents with a college degree (82%) could.
- Twenty-nine percent of 18-to-34-year-olds with a mortgage have been late with a mortgage payment, compared to just 7% in the 55+ age group.
- Hispanics and African-Americans are more likely to use high-cost forms of borrowing, like pawn shops and payday loans, compared to Caucasians—39% for African-Americans, 34% for Hispanics, and 21% for Caucasians.
Results from a Wells Fargo study also indicate that Americans aren’t saving enough for retirement and are investing too conservatively.
There’s no question that financial services organizations are doing a better job of educating consumers than ever before; however, more needs to be done. Arming consumers and investors with literature and other resources can help them become savvier with their money. For existing customers, more financial education can result in stronger relationships. As far as non-customers go, education can serve as a gateway to new business. This is why companies will strive to educate the public about managing their finances and growing their wealth, whether it’s through an app, a website, or another channel.
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