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Financial Planning > College Planning > Student Loan Debt

Which State’s Residents Are Smartest With Money?

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While Americans’ financial capability has improved over the last three years, with folks finding it easier to make ends meet and stash away a rainy-day fund, financial literacy levels remain low, and more Americans continue to worry about their debt load, according to findings from the FINRA Foundation’s just-released 2012 National Financial Capability Study.

The online survey of 25,500 American adults—performed by FINRA’s Investor Education Foundation and in consultation with the Treasury Department, President Barack Obama’s Advisory Council on Financial Capability, the Consumer Financial Protection Bureau and the Securities and Exchange Commission—also found a “significant disparity” among states’ financial capabilities and demographic groups.

The State-by-State Survey found:

  • Residents of California, Massachusetts and New Jersey who were surveyed are the most financially capable. Those states ranked in the top five among all states in at least three of five measures of financial capability.
  • Mississippi stood out as the least financially capable state, placing in the bottom five in four out of five measures. Arkansas ranked in the bottom five in three out of five measures, and Kentucky ranked in the bottom five in two out of five measures.
  • Younger Americans, especially those under 35, are more likely to show signs of financial stress, including taking a loan or hardship withdrawal from their retirement account or making late mortgage payments.
  • Younger Americans are more likely than older Americans to have unpaid medical bills. Of those surveyed, 31% of Americans age 18 to 34 reported having unpaid medical bills compared with 17% for Americans aged 55 or older.

Richard Ketchum, chairman and CEO of FINRA, said in a statement announcing the survey results that the 2012 survey “reveals that many Americans continue to struggle to make ends meet, plan ahead and make sound financial decisions—and that financial literacy levels remain low, especially among our youngest workers.”

No matter how you slice and dice it, he said, “this rich, new dataset underscores the need for us to continue to explore innovative ways to build financial capability among consumers.”

Since the last survey was conducted in 2009, Ketchum said some good news has surfaced, as noted in the 2012 findings. First, he said, “financial capability in the United States has improved in important areas. People are finding it a little easier to make ends meet. Significantly more respondents have rainy-day funds, which puts them in a better position to deal with life’s unexpected events.” Plus, he said, the “slowly improving economic environment has helped in some areas,” with nearly a quarter of respondents saying they are satisfied with their personal finances—up from 16% in 2009.

But worries persist, Ketchum continued. “Debt continues to be a problem,” he said, with more than 40% of survey respondents saying they believe they have too much debt. Although the percentage of credit card holders carrying debt on their cards has declined from 56% to 49%, nearly half still carry debt and pay interest on their balance, Ketchum noted. And about 10% use their cards for cash advances.

Issues of debt, he said, “extend well beyond credit cards.” When it comes to homeownership, 22% of those who have a mortgage indicated that they owe more on their home than they believe it’s worth.

As to medical bills, 26% of the respondents have unpaid medical bills that are past due. The number is even higher—31%—among 18- to 34-year-olds. Twenty percent of all respondents—and 36% of 18 to 34 year olds—report having student loan debt. More than half of respondents with student loan debt are concerned that they will not be able to pay it off.

The survey also gauged the top five best and worst states in key measures of financial capability. Go to the next page to see how the top five best and worst states in each category stacked up:

Largest share of residents who spend less than they make:

  1. District of Columbia
  2. New Jersey
  3. California
  4. Massachusetts
  5. Florida, South Carolina (tie)

Smallest share of residents who spend less than they make:

  1. Idaho
  2. Wyoming
  3. Oklahoma
  4. Rhode Island
  5. West Virginia

Smallest share with overdue medical bills:

  1. Hawaii
  2. California
  3. Massachusetts
  4. New Jersey
  5. District of Columbia

Largest share with overdue medical bills:

  1. Mississippi
  2. North Carolina
  3. Kentucky
  4. Arkansas
  5. West Virginia

Largest share with emergency funds:

  1. New York
  2. Massachusetts
  3. North Dakota
  4. California
  5. New Jersey

Largest share with no emergency funds:

  1. Mississippi
  2. Indiana
  3. New Mexico
  4. Kentucky
  5. Vermont

Smallest share who pay only the minimum on credit cards:

  1. Nevada
  2. Arkansas
  3. Mississippi
  4. Ohio
  5. Kansas

Largest share who pay only the minimum on credit cards:

  1. South Dakota
  2. Iowa
  3. Florida
  4. Oklahoma
  5. New Hampshire

Smallest share who have used nonbank borrowing methods, like payday loans:

  1. New Jersey
  2. New Hampshire
  3. Hawaii
  4. Massachusetts
  5. Vermont

Largest share who have used nonbank borrowing methods:

  1. Oklahoma
  2. Nevada
  3. South Carolina
  4. Texas
  5. Kentucky

Smallest share with “underwater” mortgages:

  1. Oklahoma
  2. North Dakota
  3. Maine
  4. South Dakota
  5. Vermont

Largest share with “underwater” mortgages:

  1. Nevada
  2. Arizona
  3. California
  4. Washington
  5. Georgia


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