first command financial behaviors index tax refunds april 7, 2014

FIRST COMMAND FINANCIAL BEHAVIORS INDEX TAX REFUNDS

April 7, 2014

Background and Methodology

The First Command Financial Behaviors Index examines financial behaviors, attitudes, and intentions among U.S. consumers. The Index was launched in February 2008 by First Command Financial Services, Inc. and Sentient Decisions Science, an independent market research and consulting firm.

The research is based on a monthly survey of approximately 530 U.S. consumers, ages 25 to 70 with annual household incomes of at least $50,000. Survey respondents are asked questions related to savings, investment and credit behaviors, future intentions and attitudes about financial security.

The survey is conducted online, and includes both General Population and Military households, with the sample stratified as follows:

General Population n=340Military Population n=200

2

3

In the March 2014 Index survey, the majority of Military (64%) and just over half of General Population households (53%) indicate having received a refund on their 2013 taxes.

The proportion of Military and General Population households having received or expecting to receive a refund is higher for the 2013 than for the 2012 tax year (Military 83% from 78%; GenPop 73% from 61%).

Additionally, more Military than General Population households indicate a refund this year (83% vs. 73%).

Military 2014 Military 2013 Military 2012 Gen Pop 2014 Gen Pop 2013 Gen Pop 2012 Gen Pop 2010

64%

43% 39%53%

31%41%

34%

19%

35%33%

20%

30%

32%32%

14%15%

17% 19%

27%

19%23%

4% 7% 11% 7% 12% 8% 11%

Received

Expect to Receive

Expect to Receive

Received

Not Eligible

Not Eligi-ble

No Answer No An-swer

pb p

FBIFeb0110: Did you receive a tax refund this year from the federal government?

Tax Refund Status

q

q / p significant increase / decrease from previous year at 95% confidence level; alpha indicates significant difference between Military and General Population

q

q

q

NOTE: Lift in “received” tax refund in March 2014 is attributed to fact that the tax refund questions were asked in February in 2013 and 2012 and in March in 2014.

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In 2014, the majority of Military and Gen Pop households used / plan to use their refund to put into general savings and / or pay down debt (72% & 67%).

This represents an increase from last year in allocation of tax refund dollars to general savings among Military households. Military families are more likely than Gen Pop families to direct their tax refund towards an investment account and/or to open or pay

into a college savings fund. Conversely, Gen Pop households are more likely to indicate directing their refund towards future taxes.

FBIFeb0210: What did you do with this year’s tax refund or what do you plan on doing with this year’s tax refund? Choose all that apply.

q / p significant increase / decrease at 95% confidence level; alpha indicates significant difference between Military and General Population

Tax refund plans Military (a) General Population (b)

Put into general savings

Pay down debt

Pay monthly bills

Build an emergency fund

Home improvements

Vacation

Consumer purchases

Prepay major bills or payments

Apply to future taxes

Put towards investment account

Dining out

Open or pay into college savings

Other6%

6%

3%

8%

1%

4%

8%

9%

14%

18%

14%

43%

39%

4%

2%

3%

11%

3%

8%

6%

13%

14%

16%

16%

47%

31%

2%

7%

3%

17%

0%

4%

10%

16%

11%

14%

19%

44%

43%

2014 2013 2012

6%

3%

2%

7%

2%

3%

4%

15%

9%

15%

19%

39%

41%

4%

2%

2%

3%

4%

6%

6%

12%

12%

16%

18%

31%

44%

6%

0%

4%

7%

4%

6%

7%

12%

12%

13%

20%

40%

35%

2014 2013 2012

q

q

q

q

b

b

aq

q

q

5

Dining out

Apply to future taxes


Home improvements

Consumer purchases

Pay monthly bills


Vacation


Build an emergency fund

Put into general savings

Pay down debt

5%

0%

5%

13%

10%

24%

5%

18%

14%

13%

42%

47%

0%

0%

2%

7%

8%

10%

12%

12%

22%

15%

44%

39%

With a Financial PlannerWithout a Financial Planner

*

Almost half of Military families both with an without a Financial Planner plan to use their refund to pay down debt and/or put their refund into general savings.

FBIFeb0210: What did you do with this year’s tax refund or what do you plan on doing with this year’s tax refund? Choose all that apply.

Tax Refund Plans among Military Families With vs. Without a Financial Planner

Military families who do not have a financial planner are significantly more likely to use their tax refund to pay monthly bills.

* Indicates significant difference between with/without a financial planner at a 95% confidence interval

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The majority of Military and Gen Pop households planning to use their tax refunds towards general savings and / or to pay down debt have been doing this for three plus years.

How long have you been doing the following with

your tax refund?

Military (a) General Population (b)

Number of Respondents

This is the first

time

Second year in a

rowThird year

More than three years

Number of Respondents

This is the first time

Second year in a row Third year

More than three years

Put into general savings 71 11% 17% 4% 68% 86 13% 7% 10% 70%

Pay down debt 73 15% 15% 8% 62% 97 25% 15% 11% 48%

Pay monthly bills 31 23% 10% 3% 65% 48 23% 15% 4% 58%

Build an emergency fund 23 13% 30% 13% 43% 32 25% 19% 9% 47%

Home improvements 18 28% 11% 11% 50% 29 52% 10% 3% 34%

Vacation 26 31% 27% - 42% 29 28% 24% 10% 38%

Consumer purchases 16 19% 31% - 50% 17 29% 6% 6% 59%


6 33% 17% - 50% 14 43% 29% - 29%

Apply to future taxes 0 - - - - 9 33% 22% 11% 33%


28 7% 11% 7% 75% 17 29% - 12% 59%

Dining out 5 - 20% - 80% 11 18% - - 82%


12 17% 25% 8% 50% 1 100% - - -

Alpha indicates significant difference between Military and General Population

Military and Gen Pop households behave very similarly with their tax refunds. The majority of both Military and Gen Pop households have been using their tax refund in the same way for more than three years.

FBIFeb0210a: How long have you been doing the following with your tax refund?

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The majority of respondents who indicated they would use their tax return to pay down debt plan to use their return to pay credit card debt.

The percentage who indicate using their tax refund to pay down debt by specifically paying off credit card debt increased for both Military and Gen Pop in 2014 compared to the 2013.

FBIFeb0111a: What type of debt did you or will you pay down using your tax refund?


Type of debt paid Military (a) 2014 N=73; 2013 N=74; 2012 N=63

General Pop (b) 2014 N=97; 2013 N=66; 2012 N=96

Credit card debt

Auto loan debt

Mortgage loan debt

Personal loan debt

Student loan debt

Home equity loan / credit debt 8%

17%

15%

14%

23%

73%

12%

8%

12%

17%

15%

70%

8%

11%

11%

3%

11%

78%

2014 2013 2012

3%

14%

14%

19%

24%

69%

12%

14%

19%

12%

20%

64%

7%

8%

19%

10%

16%

74%

2014 2013 2012

q

qq

8

The majority of respondents who indicated they would use their tax return to pay bills plan to put these dollars towards their mortgage or rent.

However, both Gen Pop and Military households are less likely to use their tax return towards their mortgage or rent compared to last year.

Among Gen Pop households use of tax returns for cable bill payment decreases significantly from the previous year, while use of tax returns for Internet bill payment increases significantly from one year ago.

FBIFeb0111b: What type of bills did you or will you pay down using your tax refund?


Type of bills paid Military (a) 2014 N=31; 2013 N=25; 2012 N=20

General Pop (b) 20214 N=48; 2013 N=38; 2012 N=47

Mortgage / rent

Cable

Internet

Telephone

Electric

Water

Heat / Oil 21%

23%

43%

38%

36%

38%

32%

37%

21%

37%

39%

24%

32%

55%

29%

23%

42%

40%

31%

25%

44%

2014 20132012

p

p

p

15%

20%

30%

40%

45%

50%

45%

32%

24%

32%

32%

16%

16%

60%

26%

23%

32%

32%

23%

16%

39%

2014 20132012

q

Meet with your / a financial planner

Monitor taxes and tax changes

Check loan rates on your loan accounts

Check interest rates on your deposit accounts

Check your credit score

Check your mutual fund allocation

Stay updated on the stock market

Stick to a defined budget

Monitor personal stock investments

Monitor paystubs

Monitor bank statements

Monitor credit card statements

7%

14%

11%

14%

15%

25%

30%

37%

30%

54%

79%

81%

8%

17%

22%

24%

28%

32%

36%

39%

41%

62%

76%

77%

Military (a)Gen Pop (b)

The majority of Military and Gen Pop families monitor credit card and bank statements closely.

FBIMar0110: Please indicate how often you do each of the following. alpha indicates significant difference between Military and General Population

Proactive Financial Behaviors - March 2014

Over half of all families also indicate monitoring paystubs very/extremely often. Military households are more likely that Gen Pop Households to monitor their stock investments, and check their

credit score, interest rates on deposit accounts, and loan rates on loan accounts.

9

b

b

b

b

first command financial behaviors index tax refunds april 7, 2014

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