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FINANCIAL LITERACY - US - MAY 2018

Published By :

Mintel

Published Date : May 2018

Category :

Banking

No. of Pages : N/A

Financial illiteracy is a critical barrier to financial inclusion-though certainly not the only one. But due of a lack of knowledge about finance and financial products, many consumers find themselves unable to access banking and other financial services, and are either kept out of financial markets, or exposed to often-predatory business practices. Financial literacy is therefore highly important to an individual’s financial well-being, as well as to the overall health of the economy.

Table of Contents

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
Overview
The issues
Most consumers are still neglecting basic financial hygiene
Figure 1: Financial habits and behaviors, by generation, March 2018
Figure 2: Financial habits and behaviors, by generation, March 2018
Family is the is the most common source of financial knowledge
Figure 3: Sources of personal finance knowledge, ranked, March 2018
The opportunities
Financial literacy is not being taught enough, although the future is looking brighter
Figure 4: Sources of personal finance knowledge, any rank, March 2018
Men are more financially confident than women
Figure 5: Self-assessed personal finance grade, by gender, March 2018
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Financial literacy is difficult to define
The US lags behind world leaders in financial literacy, at #14
Only 5 states received an A in a national financial literacy assessment
MARKET FACTORS
What is financial literacy?
The US lags behind world leaders in financial literacy, at #14
Figure 6: Most and least financially literate countries, November 2015
Population by grades and state percentages
Figure 7: US high school financial literacy report, percent of public high school population, by grade, 2017
Median household income
Figure 8: Real median household income, by race and Hispanic origin, 1967-2016
Personal savings rate
Figure 9: Personal savings rate percentage, monthly, seasonally adjusted annual rate, January 1980-January 2018
KEY PLAYERS – WHAT YOU NEED TO KNOW
April is Financial Literacy month
Personal financial management tools
Ally Bank strives to bring financial literacy to the nation’s youth
WHAT’S WORKING?
Champlain College: case study in financial literacy education
April is Financial Literacy month
Figure 10: Wells Fargo statement insert, July 2017
Figure 11: Allstate email campaign, April 2018
Mint
Figure 12: Mint email campaign, January 2018
Robo-advisors and the passive investment revolution
Figure 13: Betterment online advertisements, April 2018
Figure 14: Robo-advisors vs human advisors, November 2016
WHAT’S STRUGGLING?
Too many cooks in the kitchen?
National Endowment for Financial Education
Financial Literacy and Education Commission
Understanding the issue – A confusion in terms
Many consumers are not confident in their retirement savings
Figure 15: Confidence in amount saved for retirement, September 2017
WHAT’S NEXT?
Ally Bank’s financial literacy initiatives
Figure 16: Ally Bank email campaign, April 2017
Figure 17: Fifth Third Bank email campaign, July 2017
MasterCard tries its hand at podcasting
Umpqua Bank offers BFF – “Best Financial Friend”
Personal financial management services
Goldman Sachs – Marcus + Clarity
Bank of America | Erica
Figure 18: Bank of America email, March 2018
FINN by Chase
THE CONSUMER – WHAT YOU NEED TO KNOW
Most consumers rank their financial knowledge as above average
Men are more confident in personal finance than women
Consumers learn the most from family and the internet
Consumers frequently neglect basic financial habits
Consumer demand notwithstanding, most have no meaningful financial education
SELF-ASSESSED PERSONAL FINANCE GRADE
Most consumers view their financial knowledge as above average
Figure 19: Self-assessed financial grade, March 2018
Figure 20: Opinion of current financial situation, October 2017
Confidence in personal finance rises with age…
Figure 21: Self-assessed financial grade, by generation, March 2018
…and income
Figure 22: Self-assessed financial grade, by household income, March 2018
DIFFERENCES AMONG GENDER AND RACE
Men are more confident than women in their financial knowledge
Figure 23: Self-assessed personal finance grade, by gender, March 2018
Men are also more confident in their financial performance
Figure 24: Attitude toward financial services (% agree), by gender, March 2018
Racial divide
Figure 25: Self-assessed personal finance grade, by race and ethnicity, March 2018
SOURCES OF FINANCIAL LITERACY
Family is the most-cited source of personal finance knowledge
Figure 26: Sources of personal finance knowledge, any rank, March 2018
Figure 27: Sources of personal finance knowledge, ranked, March 2018
Younger consumers are even more reliant on family as a resource
Figure 28: Sources of personal finance knowledge, any rank, by generation, March 2018
The most financially literate consumers look beyond the family
Figure 29: Ranking family in the top three sources of personal finance knowledge, by self-assessed financial grade, March 2018
Figure 30: Sources of personal finance knowledge, any rank, by self-assessed grades, March 2018
Most consumers have not received valuable formal financial education…
Figure 31: Sources of personal finance knowledge, ranked, March 2018
…although younger consumers are learning more in school
Figure 32: Sources of personal finance knowledge, any rank, March 2018
PERSONAL FINANCE BEHAVIORS AND ATTITUDES
Most consumers do not follow a monthly budget…
Figure 33: Financial habits and behaviors, by generation, March 2018
…and fewer still utilize a personal financial management tool or see an advisor
Figure 34: Financial habits and behaviors, by generation, March 2018
Figure 35: Mint email campaign, April 2018
Self-assessed letter grade highly correlated with responsible behavior
Figure 36: Financial habits and behaviors, by self-assessed letter grade, March 2018
The most financially confident consumers have healthier attitudes toward money
Figure 37: Attitudes toward personal finance, by self-assessed financial letter grade, March 2018
Parents are saving for retirement, but struggling more in the present
Figure 38: Financial habits and behaviors (select), by parental status, March 2018
Younger consumers have more uncertainty
Figure 39: Attitudes toward personal finance, by generation, March 2018
INTEREST IN FINANCIAL EDUCATION
TURF analysis – Consumers are receptive to seminars and workshops
Figure 40: TURF analysis – Interest in financial education opportunities, March 2018
Figure 41: Merrill Lynch email campaign, March 2018
Figure 42: Charles Schwab email campaign, March 2018
Consumers prefer to talk to a person
Figure 43: Preference for talking to bank employee (% agree), by generation, November 2017
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
APPENDIX – THE MARKET
Figure 44: US high school financial literacy report, state breakdown by grade, 2017

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