Financial Confidence Measures Hit Record Highs in Military Families, First Command Reports
The financial confidence of America's career military families is on the rise in 2015, fueled in part by a continuing commitment to frugal living.
The First Command Financial Behaviors Index® reveals that two key measures of confidence have hit record highs. May results show that 72 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) believe that their financial situation will improve in the next year (up 23 points from January). And 69 percent are growing more confident in their ability to retire comfortably (also up 23 points for the year).
Feelings of short-term security are improving, too. Fifty-three percent of May respondents say they feel financially secure month to month, up 17 points from January and just short of the record high of 54 percent set in August 2012.
Confidence levels dropped slightly in the June survey, but still reflect an upward trend for the year.
"This upsurge in financial confidence among our men and women in uniform is a remarkable development as it comes at a time of continued anxiety about how cuts to defense spending and military pay and benefits may affect their family finances," said Scott Spiker, CEO of First Command Financial Services, Inc. "Roughly three quarters of June survey respondents said they expect to be financially impacted by sequestration. But they are feeling better about their overall finances thanks to frugal living. Half say they are increasing the amount they are saving, and one out of three are cutting back on everyday spending. These are the types of positive money behaviors that can boost financial confidence in times both good and bad. They serve as an effective agent for counteracting feelings of financial uncertainty and worries."
Servicemembers who seek out professional help are leading the way. During the first quarter, military families working with a financial advisor were considerably more likely to save money and cut debt than their do-it-yourself colleagues. The Index reveals that 91 percent of those with a financial advisor put money into retirement accounts. This compares to 71 percent for those without an advisor. Servicemembers with a financial advisor also put significantly more dollars into those retirement accounts. Monthly median contributions for savers in the two groups are $500 and $300, respectively.
Servicemembers who work with a financial advisor also put more money into:
- Short-term savings (90 percent versus 69 percent for those without an advisor). Monthly median contributions for the two groups are $500 and $400, respectively.
- Long-term savings (83 percent versus 34 percent). Monthly median contributions for the two groups are $500 and $200, respectively.
- Short-term debt (86 percent versus 78 percent). Monthly median contributions for the two groups are $500 each.
- Long-term debt (81 percent versus 65 percent). Monthly median contributions for the two groups are $900 and $1,146, respectively.
These actions helped propel the Index's behaviors sub-index score ahead 17 points and push the overall Index score to a record high of 140 for the first quarter. The score for those with a financial advisor was 149; the score for the do-it-yourself crowd was 98. The Index is set to a benchmark of 100, which was assigned when the Index was launched in 2008.
Looking ahead, most military members expect to continue their savings and debt reduction behaviors in the months ahead. However, servicemembers with a financial advisor are more likely than those without to anticipate increasing their monthly savings amounts (40 percent versus 26 percent) and the amount they pay on debt (34 percent versus 21 percent).
"These findings underscore the importance of knowledgeable and trustworthy guidance in helping servicemembers improve their own money behaviors," Spiker said. "Financial coaching through face-to-face support is a proven way to help career military families learn to cut consumer debt and discretionary spending in order to carve out a few extra dollars every month to save for the future. Those who work with a financial advisor are making the most of their government benefits by taking responsibility for and successfully pursuing their own path to retirement security. We expect to see more military families seek out professional help as they look for new ways to take greater control over their long-term finances."
About the First Command Financial Behaviors Index®
Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public's financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. www.firstcommand.com/research
About Sentient Decision Science, Inc.
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.
About First Command
First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.
First Command Financial Services, Inc., is the parent of First Command Financial Planning, Inc. (Member SIPC, FINRA), First Command Insurance Services, Inc. and First Command Bank. Financial planning services and investment products, including securities, are offered by First Command Financial Planning, Inc. Insurance products and services are offered by First Command Insurance Services, Inc., in all states except Montana, where as required by law, insurance products and services are offered by First Command Financial Services, Inc. (a separate Montana domestic corporation). Banking products and services are offered by First Command Bank. In certain states, as required by law, First Command Insurance Services, Inc. does business as a separate domestic corporation. Securities products are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met. First Command Educational Foundation is a 501(c)(3) public charity. It is not affiliated with First Command Financial Services, Inc., or any of its affiliated entities.