This project aims to assess and establish a baseline measure of the financial capability of U.S. adults. Financial capability cannot be measured simply by looking at one indicator, such as demonstrated knowledge of specific terms or concepts. Instead, financial capability encompasses multiple aspects of behavior relating to how individuals manage their resources and how they make financial decisions—including the factors they consider and the skill sets they use. It is a multi-dimensional concept that requires looking at individual behavior from various angles.
Over the past several decades, the financial landscape in the United States has changed significantly on several fronts. Individuals must take greater charge of their financial well-being once they retire, and they must also forecast future financial needs, navigate increasingly complex financial markets and manage risk, both during and after their working years. At the same time, financial products, including mortgages and products used for saving and investing, have become more numerous and more complicated, requiring individuals to make choices on an array of options.
Against this backdrop, the consequences of not having the skills necessary to make sound financial decisions become more severe. This is particularly true in times of economic instability, when resources may be limited and negative financial events, such as the loss of a job or a sharp decline in income, are more frequent. Not only has managing day-to-day finances become more difficult for many Americans, but there are also greater risks in getting it wrong.
In consultation with the U.S. Department of the Treasury and the President's Advisory Council on Financial Literacy, the FINRA Investor Education Foundation commissioned this national study of the financial capability of American adults. The overarching research objectives were to benchmark key indicators of financial capability and evaluate how these indicators vary with underlying demographic, behavioral, attitudinal and financial literacy characteristics.
The study consists of three linked surveys:
The national survey randomly dialed nearly 1,500 respondents, with an over-sampling to enable segmentation by selected demographic variables (e.g., race, household income, education level) between May and July 2009.
The state-by-state online survey of more than 28,000 respondents was released on December 8, 2010, with the launch of USFinancialCapability.org. The website displays a clickable map of the United States and allows the public, policymakers and researchers to delve into and compare the financial capabilities of Americans in every state and across geographic regions.
Released in October 2010, this online survey of 800 military personnel and spouses (recruited through a national online research panel and therefore not necessarily representative of the U.S. military population as a whole) provides an estimate of the financial capabilities of U.S. military personnel.