Survey Shows Military Financial Capabilities and Room to Improve
By Debbie Gregory.
With steady pay and job security, military families have proven to be responsible consumers. According to a Financial Industry Regulatory Authority (FINRA) report, military families were more responsible than their civilian counterparts at paying bills, budgeting, and general financial knowledge.
Between August and September, 2012, FINRA surveyed 1,000 members of the U.S. Armed Forces in support of its 2012 National Financial Capability Study of U.S. Adults. The survey also included data from an additional 301 servicemembers who participated in FINRA’s 2012 State-by-State Survey that was conducted between July and October, 2012.
The study showed specifically that military males 18-35 rated higher than the national average for being able to pay their monthly bills and in accumulating savings. The study found that 50% of military families spend less than their income, and 53% have set aside 3 months’ worth of wages to be used in case of an emergency. Additionally, 73% of servicemembers contribute to a retirement account.
But the FINRA report also showed that military families were more at risk when managing larger debts, such as mortgages. Approximately 38% of military homeowners were underwater on their home loans. A prime reason for this statistic stems from the fact that most military home loans were made recently. 84% of military homeowners surveyed bought their home in the past 10 years.
The foreclosure rates were similar for civilians and members of the military, with 11% of military males aged 18-35 have experienced foreclosure, compared to 8% of civilians.
Some of the study’s other findings were obvious. Junior enlisted service members in pay grades E-1 to E-4 had the least amount of financial capability. This is no surprise, as Junior Enlisted are at the bottom of the pay scale.
But the study surprisingly found that the group with the second lowest level of financial capability were the senior enlisted members in the E-7 to E-9 pay grades. Senior Enlisted members are at the top of the enlisted food chain and pay scale. These non-commissioned officers are the backbone of our military leadership. Their financial vulnerability could highlight a problem area for military pay that is worth researching. Senior Enlisted personnel are in the final years of their military careers before retirement. If they don’t leave the military with financial stability, then the system, or some of its components, are not functioning properly.