Understanding how and why people save, borrow and invest their money is the first step in helping individuals plan for their financial future and achieve their goals. A recent FINRA Investor Education Foundation survey sheds some light on this topic.
The National Financial Capability Survey was developed in consultation with the U.S. Department of the Treasury and the President’s Advisory Council on Financial Literacy. The data it reveals appears to comes at a critical moment for many American families. For example, the survey found that:
- only 41 percent of parents have set aside money for their children’s college education;
- the majority of Americans do not have a “rainy day” fund for unanticipated financial emergencies and are not adequately preparing for their children’s college education and their own retirement;
- more than one in five survey respondents use high-cost, alternative borrowing methods, such as payday loans or pawn shops; and
- fewer than half (46 percent) of those surveyed correctly answered two basic questions about how interest rates and inflation work.
“These survey results highlight just how important it is to give people the information and resources they need to make sound financial decisions,” said FINRA Foundation Chairman Rick Ketchum.
An executive summary, as well as a longer survey report, is available on the FINRA Foundation Web site. The Foundation will also make the survey data available to the public and to researchers.