Military Families Make The Grade On Financial Literacy Test

Editor's note: The following analysis comes from a Financial Behaviors Index release.

Active-duty servicemembers are a financially literate lot, earning an average grade of 77 percent on a test of financial knowledge jointly commissioned by First Command Financial Services, Inc., and First Command Educational Foundation.

The average middle-class military family (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) correctly answered 6.97 out of nine questions in a general financial literacy test administered through the First Command Financial Behaviors Index. And one in five test takers earned a perfect score, said Scott Spiker, CEO of First Command Financial Services, Inc.

 “At a time when we continue to hear troubling reports of ineffective financial behaviors among  some junior servicemembers, these test results offer an encouraging counterpoint for the leadership ranks of the armed forces,” Spiker said. “Our more experienced men and women in uniform possess a meaningful knowledge of money matters. We see ample evidence of their financial literacy in our monthly Index surveys, which reveal that middle-class military families are focused on saving more, spending less and cutting debt as part of a more frugal lifestyle.”

The Index reveals that financial education is important to servicemembers and their families. Roughly one-third of test takers have completed a financial literacy or financial education program. And military families are more likely to have completed this type of coursework than the general population (32 percent versus 20 percent).

That’s good news to Vickie Mauldin, chief executive officer of First Command Educational Foundation. The non-profit organization recently announced plans to develop a military-oriented version of Money Matters Online, its popular financial literacy program for high school students. Funded primarily through a $250,000 gift from First Command Financial Services, the program is designed to meet the growing need for financial literacy education in the military services.

“We are committed to delivering meaningful coursework and instructions that will help our servicemembers feel more secure in their financial lives,” Mauldin said. “We see in the Index findings that while military families are more likely than civilians to have completed a financial education program, the overall average number of correct responses to the financial literacy test does not significantly differ between military and general-population respondents. Our goal is to help military families pull ahead to become one of the nation’s most financially literate populations. We are committed to delivering the highest quality instruction to as many active-duty families as we can.”

Financial knowledge is particularly important to the emotional well-being of active-duty families. The Index reveals that financial literacy is strongly associated with feelings of financial confidence and security. Sixty-three percent of military respondents who earned a perfect score on the financial literacy test say they feel financially secure compared to only 28 percent with lower test scores – a 35-point gap. Among general population respondents, 32 percent of those who earned a perfect score say they feel financially secure compared to 24 percent of those with lower financial literacy – an eight-point gap.

“The data suggest that while financial literacy improves feelings of financial confidence and security among middle-class consumers, there is a larger divide in these feelings among servicemembers and their families,” Spiker said. “These findings stress the importance of creating and supporting financial education programs that will help to improve the financial literacy of all of our men and women in uniform, giving them the confidence and sense of security that will help them concentrate on their mission of defending our nation.”

For more information on the financial literacy test, including a list of questions and results, see our report titled  Financial Literacy in Military Families.