2018 Consumer Financial Literacy Survey

2018 Consumer Financial Literacy Survey

Prepared For:

March 13, 2018

1

Survey Methodology

The 2018 Financial Literacy Survey was conducted online within the United States by Harris Poll on behalf of the NFCC (National Foundation for Credit Counseling) between February 28th and March 2nd, 2018 among 2,017 U.S. adults ages 18+. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents' propensity to be online. Prior to 2013, this survey was conducted by telephone.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and postsurvey weighting and adjustments. Therefore, Harris Poll avoids the words "margin of error" as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Poll panel, no estimates of theoretical sampling error can be calculated.

Significance Testing

When results from sub-groups of a sample appear in the detailed tabulations, an indicator of statistically significant differences is added to the tables run on our standard demographic banners. Significance testing is done to the 95% confidence level, and the test is performed on percentages as well as mean values. Each sub-sample is assigned a letter. When the percentage of one sub-sample is significantly different from the percentage of another sub-sample, the letter representing one of the two samples appears next to the percentage (or mean) of the other sample.

For instance, the percentage of males answering yes to a particular question may be compared to the percentage of females answering yes to the same question. In the example below, the male sample is assigned the letter B, and the female sample is assigned the letter C. Here, respondents were asked whether a certain business practice is acceptable. 67% of women said that it was -- a proportion significantly greater than the 57% of males who believe that the practice is acceptable. To indicate that women are significantly more likely to find the practice acceptable than are men, the letter B -- the letter assigned to the male subsample -- appears next to the "67%" in the female column. Similarly, the 37% of men that find the practice unacceptable is significantly greater than the 29% of women who do so and, therefore, the letter C -- the letter assigned to the female sub-sample -- appears next to the "37%" in the male column.

Unweighted Base Weighted Base Acceptable

Not Acceptable

Don't Know

Total (A) 977 967

611 63%

319 33%

37 4%

Male (B) 488 464

Sex Female (C) 489 503

274 57%

337 67%B

171 37%C

148 29%

18

19

4%

4%

2

Key Findings

Budget, Spending, & Saving In 2018, about two in five U.S. adults (41%) ? a proportion that has held roughly steady since 2007 ? say they have a budget and keep close track of how much they spend on such things as food, housing, and entertainment.

About half of U.S. adults (51%) are now spending the same as last year, while about 1 in 4 each report they are now spending more (24%) or less (25%) than before. The most influential factor when deciding how to pay in certain situations (i.e., cash vs. debit vs. credit) remains the amount of the purchase (49%), followed by the points/rewards they can earn by using their credit card (40%) and where/how they are shopping (online vs. brick-and-mortar store) (36%).

Over half of adults (53%) say they are now saving the same as last year, while the proportion of those who say they are saving more has increased slightly to nearly 3 in 10 (29% vs. 26% in 2017).

The proportion of U.S. adults that has non-retirement savings remains nearly 7 in 10 (69%), but where adults are saving or investing their money varies: as in previous years, 2 in 3 continue to use a savings account (66%), but the use of 401k plans (37%) and investments/mutual funds (30%) has increased since 2017 (32% and 26%, respectively).

Retirement When it comes to retirement savings, nearly 2 in 3 U.S. adults (65%) say they save some portion of their household's annual income for retirement, an increase of 5 percentage points since last year (60%).

Despite the fact that most are saving at least something for retirement, fewer than 1 in 5 U.S. adults (19%) feel very confident ? and about 3 in 10 (29%) reveal they are not at all confident ? that they are saving enough. And, when asked what areas of personal finance worry them most, the top response is still retiring without having enough money set aside (16%), followed closely by insufficient "rainy day" savings (14%).

Homeownership Nearly 4 in 5 U.S. adults (78%) have tried to purchase their own home, and 72% are currently homeowners.

The top 5 barriers faced by potential homeowners are: Rising home prices; Lack of funding for the down payment or closing costs; Existing debt; Limited housing options within available budget; and, Poor credit history or low credit score.

Credit Card Debt A majority of U.S. adults (61%) have had credit card debt in the past 12 months, and nearly 2 in 5 (38%) indicate their household carries such debt from month to month. Few have done something in an attempt to obtain a lower interest rate for their credit card debt, primarily because they are satisfied with their current rates or they had never thought of it.

3

Key Findings (continued)

Knowledge of, and Confidence in, Personal Finance Over half of U.S. adults (55%) continue to give themselves a grade of A or B on their knowledge of personal finance, and 9 in 10 (90%) say they are very or somewhat confident that the last time they made a big financial decision (such as picking a credit card, buying a car, or refinancing their mortgage), they made the right choice.

More than 3 in 4 (77%) feel knowledgeable about how their credit score is determined; About 4 in 5 (79%) feel knowledgeable about the fees their bank or financial institution charges; and, Just over half (52%) say they are knowledgeable about payday loans and other types of high-interest short-term loans (52%), an increase of 5 percentage

points from 2017 (47%).

Yet, about 8 in 10 (79%) agree ? including nearly three in ten (29%) who strongly agree ? that they could still benefit from advice and answers to everyday financial questions from a professional. In fact, when asked who they would turn to for general financial/money management guidance, the top response is a financial professional such as a CPA or financial planner (37%), followed closely by friends and family (36%).

In 2018, fewer U.S. adults would turn to a bank or credit union for financial advice (25% vs. 32%).

Debt and Credit Counseling While nearly 3 in 4 U.S. adults (72%) continue to pay all their bills on time and have no debts in collection, one in four (25%) admit they do not pay their bills on time and nearly 1 in 10 (8%) now have debts in collection, both a slight increase from last year (22% and 5%, respectively).

Only 15% of all U.S. adults say they have never had any debt, while more than half (55%) struggle to minimize their debt, primarily due to unexpected financial emergencies (24%).

When asked why they would not reach out to a professional non-profit credit counseling agency for help if they were having financial problems related to debt, about one in five adults (21%) say they can resolve their own problems without outside help, and a similar proportion (19%) don't know which agency to turn to, a slight increase since last year (15%).

About one in four U.S. adults (24%), or almost 59 million Americans1, indicated they would reach out to a professional non-profit credit counseling agency for help.

Small Business Financing If they were looking to start a new business...

Nearly 1 in 3 (32%) would seek a business loan through a community (15%) or national (14%) bank, credit union (17%), or online-only lender (6%) About 1 in 4 (26%) would rely on personal funds (22%) or liquidate personal assets (9%) Nearly 1 in 5 would apply for a public or private grant (19%), or seek an SBA-backed loan (18%)

One in three U.S. adults (34%) are not at all sure how they would come up with the money if they were looking to finance a new business.

1 Calculation based on U.S. Census Bureau's 2016 Current Population Survey (CPS), which estimates there are 244.81 million adults ages 18+ residing in the United States: 244.81M x 0.24 = 58.75M. 4

Posted Topline Data

Q705

Which of the following best describes how you manage your money?

Total 2018

%

Total 2017

%

Total 2016

%

Total 2015

%

Total 2014

%

Total 2013

%

Total 2012

%

Base: Adults 18+

Total 2011

%

Total 2010

%

Total 2009

%

Total 2008

%

Total 2007

%

(n=2,017) (n=1,649) (n=1,668) (n=2,017) (n=2,016) (n=2,037) (n=1,007) (n=1,010) (n=2,028) (n=1,000) (n=1,001) (n=1,003)

A

B

C

D

E

F

G

H

I

J

K

L

I have a budget and keep close track

of how much I spend on such things

41

40

40

40

39

40

43 E

43 E

43 EL

42

42

39

as food, housing and entertainment

Don't Have A Budget (Net)

59

60 GHI 60 GHI

60 GHI 61 GHIJ 60 GHI

56

56

56

57

N/A

N/A

I have a somewhat good idea about how much I spend on such things as food, housing and entertainment, but I don't keep strict track of my spending on these things

I don't have a good idea how much I spend on such things as food, housing and entertainment, but I keep track of my overall spending and try to stay within certain limits that I've set for myself

I don't have a good idea how much I spend on such things as food, housing and entertainment, and I often don't keep track of my overall spending

Don't know

Refused

48 GHIJKL

8

4 N/A N/A

46 GHIJKL

9

5 N/A N/A

46 GHIJKL

9

5 N/A N/A

46

48

48

GHIJKL GHIJKL GHIJKL

34

15

9

8

8

ABCDE

FJK

7

5

5

4

ABCDE

FI

N/A

N/A

N/A

1

N/A

N/A

N/A

*

34

15 ABCDE

FJK

7 ABCDE

FI

1 *

37

14 ABCDE

FJ

5

1 *

39 GH

35

11 AEF

12 ABCDEF

7 ABCDE

FI

7 ABCDE

FI

1

2 I

*

2

36

15 ABCDE

FJK

7 ABCDE

FI 2 I 1

5

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