Financial Capability & Family Financial Stability Michelle D. Greene Deputy Assistant Secretary for Financial Education and Financial Access US Department of the Treasury

Financial capability is a key part of financial stability  Administration commitment to financial education/capability Presidential Proclamation – Financial Literacy Month (Apr. 2010) Executive Order created President’s Advisory Council on Financial Capability (Jan. 2010) White House joined FLEC (Jan. 2010)  Opportunity and Responsibility

Financial Literacy in the Federal Government Financial Literacy and Education Commission (FLEC) President’s Advisory Council on Financial Capability Treasury Department Agencies, programs, interagency efforts  White House Council on Women and Girls  Interagency Working Group on Domestic Violence

Our Priorities and Approach Make it evidence-based Put it where it works Focus it where it’s needed most Increase access Work with state and local governments, private and non-profit sectors

Financial Education Core competencies & metrics Catalogue of federal programs mymoney.gov revamp National Strategy FINRA U.S. Financial Capability Survey

National Strategy 2010 Vision Sustained financial well-being for U.S. individuals and families The national strategy will set the strategic direction for policy, education, practice, research, and coordination in the area of financial education and literacy. Mission Set strategic direction so individuals and families can make informed financial decisions Goals Increase access and awareness Identify core competencies Establish standards Identify what works

FINRA U.S. Financial Capability Survey - Objective  Annamaria Lusardi (Dartmouth College)  Applied Research & Consulting LLC (ARC)  FINRA Investor Education Foundation  Office of Financial Education, U.S. Treasury Department  Additional input from: Craig Copeland, Employee Benefit Research Institute (EBRI) American Institute of Certified Public Accountants (AICPA) Bob Willis, Univ. of Michigan, past PI of U.S. Health and Retirement Study Establish a baseline measure of the ability of Americans to manage their money. Multi-Disciplinary Team: Copyright 2007, FINRA Investor Education Foundation

Study Methodology National Financial Capability Study includes three linked surveys: 1. National Survey: Nationally-projectable telephone survey of 1,488 American adults 2. State-by-State Survey: Online survey of approximately 25,000 respondents (roughly 500 per state + DC) 3. Military Survey: Online survey of 800 military personnel and spouses Copyright 2007, FINRA Investor Education Foundation

Four Key Financial Capability Components 1. Making Ends Meet 2. Planning Ahead 3. Managing Financial Products 4. Financial Knowledge and Decision-Making Copyright 2007, FINRA Investor Education Foundation

FINRA U.S. Financial Capability Survey – Making Ends Meet In a typical month, how difficult is it for you to cover your expenses and pay all your bills? Signs of Financial Strain In the past 12 months, have you experienced a large drop in income which you did not expect?

Those Most at Risk Are Least Prepared for Emergencies... Respondents with emergency or rainy day funds that would cover expenses for 3 months Copyright 2007, FINRA Investor Education Foundation

FINRA U.S. Financial Capability Survey - Many Americans Don’t Plan Ahead Are you setting aside any money for your children's college education? Have you set aside an emergency or rainy day fund? Have you ever tried to figure out how much you need to save for retirement?

Planning for Retirement FINRA respondents who have tried to plan for retirement

Retirement Accounts & Investments Respondents who… Total<$25K$25- $75K >$75KLess than HS HSSome College College Have a retirement plan via employer 51%13%61%83%22%39%54%76% Have other retirement accounts 28%4%27%57%7%14%26%55% Have stocks, bonds or mutual funds outside of retirement accounts 46%17%47%72%N/A34%46%66%

Financial Literacy Count of correct and incorrect quiz answers (total 5 questions) Number of correct answers Number of incorrect answers Copyright 2007, FINRA Investor Education Foundation

Self-Perception versus Financial Behavior However, 24% who strongly agreed and 40% who agreed engaged in behaviors that generated fees or high costs. Copyright 2007, FINRA Investor Education Foundation “I am good at dealing with day-to-day financial matters” Respondents with credit cards and checking accounts

Key Websites Education Network (FLEC’s state and local group)  To join, Our websites  (FLEC)  (Treasury)