Survey on Personal Finance Survey on Personal Finance Important TopicsImportant Topics

Megan O’Neil, MPS, CFCS, The University of Maryland

Fahzy Abdul-Rahman, Ph.D., New Mexico State University

Barbara O'Neill, Ph.D., Rutgers University

2012 eXtension Annual Conference

October 2012

MethodsMethods

• Survey on Personal Finance Important Topics– OPENED: November 1, 2011 to April 30th 2012 – n= 724

• “The goal of this survey is to gather information on important topics in personal finance. While your participation in this survey is voluntary, your response will greatly help in designing personal finance programs to meet the public's needs.”

• Google Survey Docs

• Family Economics News: March - April 2012 - 3/22/2012

• Ken McDonnell McDonnell@ebri.org to EBRI - Distro - ASEC_Partners ASEC_Partners@ebri.org 2/9/2012

• Shockey, Susan sshockey@nifa.usda.gov Wed 2/8/2012 2:07 PM

• Shockey, Susan sshockey@nifa.usda.gov Wed 11/2/2011 Everyone - NIFA Everyone Distribution List everyone@nifa.usda.gov + 'family-econ@lyris.nifa.usda.gov'; 'fcsldrs@lyris.nifa.usda.gov'; 'fsllcontacts@lyris.nifa.usda.gov'; 'amer-saves@lyris.nifa.usda.gov‘ + fe-partners@lyris.nifa.usda.gov

The Survey LinkThe Survey Link

• http://bit.ly/qG0IG5

• After survey creation

• How to view the ready-made stats

Preliminary Preliminary ResultsResults

To Obtain To Obtain StatisticsStatistics

• Click “See Responses”

• & select “Summary”

Data SetData Set• N= 724

• States with = or > 20 respondents were included for interpretation

• Selected Set N=533 representing 77% of total original response

• Separated regions (NE, MW, S & W)

• Northeast Region (n=22) too small for further reliable analyses and comparison by region

13 States Included n= %N=13 States Included n= %N=Alabama 28 4%

Florida 36 5%

Iowa 42 6%

Maryland 49 7%

Michigan 72 10%

Minnesota 20 3%

Mississippi 60 8%

Missouri 24 3%

Ohio 22 3%

Oklahoma 47 6%

Utah 28 4%

Virginia 98 14%

Washington 27 4%

Respondent CharacteristicsRespondent Characteristics

• Age18+; age 19+ (Nebraska & Alabama); range ages 18 – 80 with good bell shaped distribution

• Predominantly female (81%)• Income

Less than $25,000 6%

$25,000 to $49,999 30%

$50,000 to $74,999 28% 45%

$75,000 to $99,999 17% 63%

$100,000 or greater 18%

• Highly educated Bachelor’s degree 28%

Post college degree 54%

Race EthnicityRace Ethnicity

Did We Survey Ourselves?Did We Survey Ourselves?

People in the Southern region rated themselves less People in the Southern region rated themselves less knowledgeable than those in the Midwest or West knowledgeable than those in the Midwest or West

rated themselvesrated themselves(MW 4.125/S 3.916/W 4.194 p=.0027),(MW 4.125/S 3.916/W 4.194 p=.0027),

but overall, allbut overall, allpeople rated themselvespeople rated themselves

quite knowledgeable.quite knowledgeable.

People in the Western region reported getting their People in the Western region reported getting their personal finance information from adult education personal finance information from adult education

more than those from the Midwest or Southmore than those from the Midwest or South(MW 3.438/S 3.280/W 3.605 p=.0223)(MW 3.438/S 3.280/W 3.605 p=.0223)

People in the Western and Midwestern People in the Western and Midwestern regions took courses in college and/or regions took courses in college and/or

majored in a personal finance area and/or majored in a personal finance area and/or attended workshops/talks to a significantly attended workshops/talks to a significantly

greater degree (p=.0353, p=<.0001 and p=.002 greater degree (p=.0353, p=<.0001 and p=.002 respectively) than those from the Southrespectively) than those from the South

Important Topics for Adults:Important Topics for Adults:Adult RespondentsAdult Respondents

• The Western region was significantly more concerned than other regions with several topics for adults as compared to other regions (mortgages, loans, other, paying yourself first, debt and credit, scams/frauds/identity theft)

• The Midwest and Western regions shared a significantly higher concern for dealing with mortgages

Q4: Important Personal Finance Q4: Important Personal Finance Topics for Adults - OTHERTopics for Adults - OTHER

•   Tax forms are so complicated it would be useful to have some classes about different forms and issues.                                                       estate planning                     credit history/ credit cards/which banks are the best (fees vs. no fees)         Will I be able to manage on Social Security? Will there still be Social Security? Will I win the lottery?                 what legislation is in the works that will change our exemptions and savings-ir not being able to claim taxes or interest on our mortgages. Taxing social security, etc.       allocating savings during retirement to increase income while decreasing risk of losing principal.                           How do I get out of the payday loan cycle. Being underwater on your mortgage. Short sale options to get out of loan. Strategic default on home loan. Declaring bankruptcy.       Dealing with aging parents finances     Teach children about money   How to keep track of recent changes in bank fees and charges.              Since I do not own a home and will probably not be able to save a significant down-payment, affordable housing for the immediate future and certainly into retirement is a serious concern for me. At this time due to salary I do not qualify for assistance. Rents are extremely expensive.                                     Understanding Taxes, Marriage and Money, Financial Issues/Implications of Divorce, Children and Money; Foreclosure Prevention                 Chronic spending issues(as means for social opportunities or to stuff frustration)                 I believe more should be done to help citizens break down the finncial implications facing the US economy. Currently one line headliners from newpapers and Congress are not clearly lining up the facts on the issues and proposed solutions.            Credit Scoring practiciesCredit rate practicies       Estate planning - end of life issues                   Buying vs. Renting after the debt crisis.                 My new bank removes money from my bill pay account ahead of the send date, then take 5 business days to send the check and then the check is not cashed for 2 to three days. Who has ownership of the money between the time when the money is taken out and the time the person receiving the check cashed the check? I think that it should be me. My bank representative cannont tell me where the money is during the time frame. I am not sure why the representative cannot provide clarity.

I am looking at other banks and credit unions to see what services and fees they charge for my specific needs before I move or stay. Any suggestions?

                            Lots of changes with banking - many choices for checking accounts - money markets, saving, etc. What is best??                                     Crisis financial managementUnemployment impact        Investing education, even at the adult level, should be offered starting with a very simple "dummies" version...assume the participant has hardly even glanced at a stock market report. Too many programs are too complicated even at the beginner level, and those who have no experience often feel overwhelmed when instructors assume they know how to read the business pages.       Mitigating risk                     The above-checked topics are important to me -- not necessarily others.                   How to repair your credit.                     I just wanted to be clear that for these "important topic" questions, I checked off which topics are the most important IMHO. I think ALL of the topics listed are currently important topics.             n/a       Money & Marriage - communications about money Stock Market Basics                                                                     Adult children moving back home. Saving Money at the gas pump and at the grocery store.                                 All areas are very important. Thank you for asking.   Getting out of debt.                 I would also include preparing wills and trusts for everyone.               All information I find is based on already having extra left over after the bills. What do you do if you do not have debt or extras like cable and still don't have enough leftover for food? How do you get to the point where you are working month to month?                   Consumer disclosures. Fees in banking and lending.         The economy the next twenty years will be nothing like the last twenty due to government deficit, entitlement program changes, demographic changes, etc.etc. Living within ones means is going to be more important. Taxes will be higher.        

•                                                                             How to get the most from your savings and keep it safe.                     How to fix bad credit...where do you start?I have old credit issues, some resolved, a few not...what do I do?Maybe call the workshop: Mistakes don't have to haunt you forever: How to get your good credit score back.                 Investing in stock market, mutual funds, money markets -- define each for personal need/goal               Credit history, credit score and how to improve your "numbers"           creating a spending plan     Wills                                   As my parents did, from the time my children were old enough to grasp the concept of money, I urged them to plan for their futures. When they graduated from college and got their first jobs, I always told them to pay themselves first, even if it's just a few dollars a week. That habit, over time, can lead to financial stability.                 the perils of payday lending Understand income tax.Keeping key financial records.Purpose of a will.Major consumer protection laws.Evaluate advertising on financial services and products.Know how to comparison shop for financial services and products.       How to get out of debt!           Cost of vices such as gambling                                               Since many low income people in rural areas have no computer access, publications on a lower educational level are needed. Someone recently told me "Extension's publications are wonderful, however, someone with a low level of education won't/can't read them. You need something with more pictures, simply written."                         teaching children financial responsibility, teen financial literacy       Need information on Estate Planning                                             Correlation with healthy lifestyle; taking care of assets, being resourceful Critical thinking skills and discernment                               best long term care options         I think one of the main important topics or overriding themes is coping or adjusting to the uncertainty and change in the economic environment at large. This affects people across the entire range of topics cited above. I think the significant pace of change over the last several years has left most people struggling to keep up.

I think those most immediately affected by the economic crisis, e.g. the unemployed, those who have seen a significant reduction in income, facing foreclosure, etc., are naturally having their attention focused on dealing with relatively near term personal finance concerns, like managing cash flow & debts.                 Tithing                                 Managing business investments There is a large segment of the populace without basic information/knowledge about personal finance, such as: balancing a checkbook, figuring interest, actual cost in time pay, etc. I believe correcting this lack of basic knowledge should be the highest of priorities.Finances for the single woman

Estate planning     Investments like gold silver oil etc.         Home Repairs

Car Buying

Emergency Preparedness                       Lending money to family members or friends.     understanding how economic conditions will affect consumers; managing money in crisis situations; credit scores;             Mortgage Fraud and what government programs are available and safeWhat is the best way to address complaints against federal and or State banks?Why isn't the community more involved in teaching basic financial skills in HS or even elementary school?   How to estbalish credit.                   CFP           stock market                                                                                 Budgeting after loss of job or other income   Basic financial literacy concepts: compounded interest, why paying cash makes sense.   Undestanding WHY its inportant to develope money management life skills.                 How to teach Children about moneyTalking with boyfriends/ girlfriends about moneyHow much house can you affordImportance of credit score                            I think our American culture is too. . . nice when discussing/teaching about debt management. I think debt can be helpful when doing initial business startup costs or buying a home or paying for Professional school, not undergrad. I think it is a mistake to keep telling students and clients that debt is ok as long as it is within said percentage of take home pay. I think we should view debt as the entitlement breeding cancer that it is. It destroys individuals and families and few financial professionals are bold enough to call it for what it is.I also think people should understand taxes better. They can keep better records when they know more. I also think they should know what their money is being used for,not just intended to be used for.                       As a single Mom, what ways can I plan to pay for my children's college without developing life-long debt.           Ensuring that banking services are available to all consumers.       Dealing with financial/tax issues in blended familiesTax issues to Families of Fallen Troops       choosing a financial advisorCCCS and legitimte bankruptcy alternatives             medical

Important Topics for Youth: Adult RespondentsImportant Topics for Youth: Adult Respondents

• The Western region was significantly more concerned than other regions with the following topics for Youth: paying yourself first and managing debt and credit

And somewhat more concerned with the following for Youth: importance of credit history and

scams/frauds/identity theft• The Southern region was somewhat more concerned

for Youth with using online banking• The Midwest region was somewhat less concerned

for Youth with saving and investing options

• The Western region was significantly more concerned than other regions with the following topics for Older Adults: scams/frauds/identity theft and dealing with mortgages

And somewhat more concerned with the following for Older Adults: talking about with family, knowing your consumer rights and caregiving

• The Midwest and Western regions shared a somewhat higher concern for financing healthcare expenses

Important Topics for Older Adults:Important Topics for Older Adults:Adult RespondentsAdult Respondents

• People living in the West will think personal finance education on almost any topic is important!

• The South recognized using online banking as an important topic for Youth more than any other region. This may mean that people in the South are more aware of online banking technologies as they relate to Youth and potentially are more interested in Youth financial capabilities outreach.

• The Midwest expressed less concerned for Youth with saving and investing options. Again – this may mean that Midwesterners are more aware of Youth priorities. Awareness could translate into support or nonsupport of programs.

• What is happening locally and regionally in housing, in particular Mortgages, raises concern significantly for education in this topic area.

If the Sample is Reliable, What Does the If the Sample is Reliable, What Does the Geographic Correlation Tell Us?Geographic Correlation Tell Us?

Discussion and Discussion and Implications Implications

Financially Knowledgeable Financially Knowledgeable Sample?Sample?

• 8 of 10 respondents agreed (51%) or strongly agreed (30%) that they were financially knowledgeable

• Is this really true or indication of overconfidence?

– People often don’t know what they don’t know

• Would be interesting to assess actual financial practices

A Sample of Do-It-Yourselfers?A Sample of Do-It-Yourselfers?

• Only 11% always and 48% sometimes get information from financial advisors

• Family members rate about the same: 14% always and 45% sometimes

• Are people getting information themselves or just not getting information?

Sources of Financial informationSources of Financial information• Mixed preferences among traditional Extension

outreach methods

• Always/sometimes combined percentages:– Seminars: 39%– Courses since leaving school: 53%– Newspapers/magazines: 73%– Cooperative Extension: 49%– Internet Sources: 72%– Software: 30%

• 80% said their personal finance courses were “self-studied”

““Hot” Topics Reflect Hot” Topics Reflect Respondents’ Age and Recent Respondents’ Age and Recent

Economic ConditionsEconomic Conditions

• Planning for Retirement (85%)

• Saving and Investing (80%)

• Managing Debt and Credit (79%)

• Budgeting (68%)

• Managing Cash Flow (61%)

• Scams, Frauds, and Identity Theft (60%)

Age-Specific Content Age-Specific Content PreferencesPreferences

Youth

• Making Decisions About Money (87%)

• Using Credit and Credit Cards (82%)

• Keeping Track of Money (81%)

• Understanding Income and Expenses (78%)

• Creating a Plan for Spending (75%)

Older Adults

• Preparing Wills and Trusts (89%)

• Managing Retirement Income and Savings (88%)

• Long-Term Care (83%)

• Financing Health Care Expenses (81%)

• Scams, Frauds, and Identity Theft (77%)

2012 CFA/Primerica Study2012 CFA/Primerica Study

• Study of households earning $40k to $100k

• Analyzed Federal Reserve data

• Respondents rated “good to excellent” ability to budget and manage credit card debt (81%) and save for retirement (63%)

• Only 15% rely on television, the Internet, or publications

• Typical family had retirement savings of $27,300, down from $37,800 in 2007

Implications for Future Implications for Future eXtension OutreacheXtension Outreach

• Develop new content to assist “do-it-yourselfers” (e.g., worksheets, calculators, resource guides, do-it-yourself financial planning activities)

• Develop new content on priority topic areas

• Use multiple methods of outreach, especially Internet and publications

• Strive for increased visibility as an unbiased source of financial information