More than three-quarters of U.S. adults think they’re good at managing their finances, but only 14 percent aced a 5-question quiz on basic financial concepts like interest rates, mortgages and inflation. This is according to a State-by-State Financial Capability Survey released by the FINRA Investor Education Foundation.
More than 25,000 Americans participated in the survey, developed in consultation with federal agencies and the President's Advisory Council on Financial Capability. The survey found disparities between states when it comes to how its residents handle day-to-day finances and save for the future. California, Massachusetts and New Jersey topped the capability list. Those states ranked in the top five in at least three of the five measures in the survey. Mississippi, Arkansas and Kentucky placed near the bottom in two or more of the five measures.
Age also played a factor. Millennials in particular showed signs of financial stress. Those 34 and under were more likely to take out a loan or hardship withdrawal from a retirement account, or make late mortgage payments. When it comes to medical bills, this age group was almost twice as likely to have unpaid medical bills than Americans 55 or older.
How Do You Stack Up?
Look at the national averages in five key areas of financial capability to see how you stack up:
• Spending vs. Savings. Fewer than half (41 percent) of Americans spend less than their income.
• Unpaid Medical Bills. Over a quarter (26 percent) of Americans have unpaid medical bills.
• Rainy Day Funds. More than half of Americans (56 percent) don’t have rainy day savings to cover three months of surprise financial emergencies.
• Credit Card Problems. Over a third of Americans (34 percent) paid only the minimum credit card payment during the past year.
• Financial Knowledge. On a test of five basic financial literacy questions, the national average was 2.88 correct answers. Take the quiz.
The survey findings are available at www.usfinancialcapability.org. A clickable map of the United States lets you compare the financial capabilities of Americans across all 50 states, the District of Columbia and the nation as a whole.
Gerri Walsh is Senior Vice President of Investor Education at the Financial Industry Regulatory Authority (FINRA).
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