Highlights From the FINRA Foundation National Financial Capability Study

Financial Capability in the United States Financial Literacy and Financial Capability To assess respondents' financial literacy, the 2021 NFCS used seven quiz questions covering fundamental economics, personal finance, and numeracy concepts (including the new question on understanding probabilities discussed earlier in this report). As in previous years, the data show that financial literacy is strongly correlated with behavior that is indicative of financial capability. Respondents with higher financial literacy (above the median number of correct answers on the seven- question quiz) appear to be better prepared for their short-term financial needs. They were more likely than those with lower financial literacy to report spending less than their income (53 percent vs. 35 percent) and setting aside three months' worth of emergency funds (65 percent vs. 42 percent). Spending less than income Higher financial 53% literacy Lower financial literacy 35% Have set aside three months' worth of emergency funds Higher financial 65% literacy Lower financial literacy 42% ► In addition, those with higher financial literacy are more likely to have taken steps to plan for their long-term financial future, such as calculating retirement savings needs (52 percent, compared to 29 percent among those with lower financial literacy) and having a retirement account (70 percent vs. 43 percent). Have tried to figure out retirement savings needs (among non-retired respondents) Higher financial 52% literacy Lower financial literacy 29% Have any type of retirement account (among non-retired respondents) Higher financial 70% literacy Lower financial literacy 43% <14> Highlights From the FINRA Foundation National Financial Capability Study

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