What Young Adults Need to Know About Money

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Welcome to the Military Families Learning Network

Panel Discussion What Young Adults Need to Know About

Money!

This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.


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Panelist: Bill Cheeks!William “Bill” Cheeks is President of ABBA Associates Inc., a fiscal management consultant. Bill is a consultant to the Jump$tart Coalition for Personal Financial Literacy and, in that capacity, serves as Regional Consultant, Eastern States, assisting and advising Jump$tart state coalitions in the region. !

Panelist: Dr. Joyce Serido!Dr. Joyce Serido is an Assistant Research Professor at the University of Arizona’s Norton School of Family and Consumer Sciences/Take Charge America Institute and is the Principal Investigator for the Arizona Pathways to Success Transition to Adulthood initiative.!

Panelist: Dr. Shelley MacDermid Wadsworth!Dr. Shelley MacDermid Wadsworth is a Professor and Director of the Center for Families and the Director of the Military Family Research Institute at Purdue University. Over the past 20 years, her research has focused on the relationships between work conditions and family life. !

Jump$tart® Coali@on for Personal Financial Literacy

An independent, non-‐profit coali@on of more than

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Jump$tart Coali@on for Personal Financial Literacy

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ARIZONA PATHWAYS TO LIFE SUCCESS FOR UNIVERSITY

STUDENTS (APLUS) Joyce Serido, Asst. Director & Research Professor

Take Charge America Ins@tute University of Arizona

June 5, 2014

Funding for this study provided by the Na5onal Endowment for Financial Educa5on (NEFE) and the Ci5 Founda5on

Copyright @ Take Charge America Ins?tute 2014

Copyright@APLUS Take Charge America Ins?tute, 2014

SOCIALIZATION •  Financial paren?ng

is key influence

•  1.5 ?mes that of financial educa?on

•  2 ?mes that of their friends


COGNITION

3%

11% 14%

CUMULATIVE EFFECTS OF FINANCIAL EDUCATION Copyright@APLUS Take Charge America Ins?tute, 2014

FINANCIAL SELF-‐AWARENESS

3.5

4.5 4.0 3.7

4.6 3.7

Perceived financial efficacy

Perceived financial control

Posi?ve financial aStudes

Wave 1 Wave 2


FINANCIAL BEHAVIOR

2

3

4

Wave 1

Wave 2


FINANCIAL BEHAVIOR AND WELL-‐BEING

2

2.5

3

3.5

4

4.5

Financial Sa?sfac?on

Life Sa?sfac?on

Psychological Well-‐Being

Physical Well-‐Being

Poor Low Average High Copyright@APLUS Take Charge America Ins?tute, 2014

Financial Parenting

Work Experience Education

Financial attitudes

Perceived financial control

Financial efficacy

Saving Budgeting Investing Tracking

Ini%ate Improve Promote

Subjec@ve financial knowledge

Objec@ve financial knowledge

Socializa@on

Cogni@on

Self-‐Awareness Behavior

Well-‐Being

Financial Physical Psychological Life Satisfaction

FINANCIAL CAPABILITY DEVELOPMENT


WHAT IS “FINANCIAL CAPABILITY”?

•  Knowledge and competencies [rela?ve to personal finance], ability to act on that knowledge, and opportunity to act (Johnson & Sherraden, 2007)

•  The ability to make good financial decisions in their own behalf (FINRA, 2009)


PROMOTING YOUNG ADULTS’ FINANCIAL CAPABILITY

Strategies for


PERSONAL FINANCE IS…PERSONAL •  Personal goals and values -‐ the founda?on of

personal financial style •  Financial style -‐ the way you approach financial

choices –  Financial style comes from self-‐understanding and self-‐

expression

•  There is a “cause and effect” inherent in financial choices


FIRST STEP TOWARD FINANCIAL CAPABILITY

Awareness •  Personal goals, values, aStudes •  Financial prac?ces (what one can do) •  Financial knowledge (understanding how financial

services work)


FINANCIAL LEARNING IS ONGOING

•  Financial decision-‐making is a daily event •  Individual understanding evolves •  Prac?ce making financial choices


SECOND STEP TOWARD FINANCIAL CAPABILITY

Relevance •  Financial well-‐being is a personal assessment of

sa?sfac?on with one’s finances. •  Financial well-‐being contributes to quality of life •  Financial well-‐being emerges from managing your

resources well •  Financial well-‐being ≠ wealth


PROACTIVE COPING PROMOTES WELL-‐BEING

Proac?ve coping involves: •  Star?ng with a goal or purpose •  Gathering informa?on (mul?ple sources) •  Evalua?ng informa?on •  Making best choice (for you)


THIRD STEP TOWARD FINANCIAL CAPABILITY

RESPONSIBILITY •  Invest in yourself •  Career planning is one of the most important financial

decisions you will make •  Things change… things are always changing

Try it…see what happens…adapt


Questions!!!!

Please enter your question in the chat box! - or Tweet your question using #MFLNPF!

What Young Military People Need to Know about Money

Shelley MacDermid Wadsworth June 5, 2014

Today, Enlisted Average Military Compensa?on Exceeds Earnings of Most Workers with High School

Educa?on

Civilian earnings are for full-‐?me, full-‐year male workers star?ng at age 20 Thanks to James Hosek for this slide

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

0 2 4 6 8 10 12 14 16 18 20

Annu

al earnings (2013 $)

Year of service

Males with High School: 2011

p_90

p_80

p_70

p_50

RMC

Officer Average Military Compensa?on Exceeds Pay of Most Workers with Bachelor’s Degree

Civilian earnings are for full-‐?me, full-‐year male workers star?ng at age 24 Thanks to James Hosek for this slide

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

0 2 4 6 8 10 12 14 16 18 20

Annu

al earnings (2013 $)

Year of service

Males with Bachelor's Degree: 2011

p_90

p_80

p_70

p_50

RMC

Military Wives Have Lower Labor Force Par?cipa?on and Earnings Than Comparable

Civilian Wives •  Labor supply

–  9 percent lower labor force par?cipa?on rate –  6.4 fewer work weeks among labor force par?cipants –  10 percent less likely to work 30 or more hours a week (“full-‐?me”) –  14 percent less likely to work 33 or more weeks a year (“full-‐year”) –  14 percent less likely to work both full-‐year and full-‐?me

•  Earnings –  13 percent lower if work part-‐?me –  14 percent lower if work full-‐?me

•  These differences may reflect both –  Preference for less par?cipa?on and work –  Fewer employment opportuni?es and lower wage offers

Based on regression analysis of American Community Survey data for 2005-‐2011, controlling for age, educa?on, year, whether federal employment, whether spouse is a veteran, and weeks worked (in earnings regressions)

Labor Supply and Earnings Differences Imply Average Annual Earnings 20

Percent Lower Military wife

Comparable civilian wife

Percent difference

Earnings by whether working part-‐?me or full-‐?me Part-‐?me $9,037 $10,352 -‐13% Full-‐?me $31,116 $36,325 -‐14% Percentage working full-‐?me among those working

75% 83% -‐14% Overall average earnings among those working

$25,723 $32,112 -‐20%

Drawing together findings so far: Military spouses’ lower earnings par%ally offset the higher earnings of service members, plus military families have zero-‐cost health care

‘Can’t make ends meet’ or ‘In over our heads’ Junior Enlisted Service Members

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2002 2009 2010

Individual Financial Problems

Overall Financial Condi?on

Source: 2011 Family Readiness Report to Congress

‘Can’t make ends meet’ or ‘In over our heads’ Military Family Life Project Mothers

2010

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Preschool School Age High School None

Financial Problems Are More Common in Families Where …

•  Service members are in pay grades lower than O4 •  Spouses are unemployed •  The family had a hard ?me readjus?ng to the service member’s presence following return from deployment

•  Service members have been wounded in ways that interfere with family life

•  Someone in the family has special medical or educa?onal needs

Data Source: Military Family Life Project 2008

Financial Problems Are Less Common in Families Where …

•  Money is put aside each month •  There is $500 or more in emergency savings

•  Social support is higher than average •  The service member is female •  The family is enrolled in the Excep?onal Family Member program

Data Source: Military Family Life Project 2008

Conclusions •  Service members’ compensa?on is higher than that of comparable civilians

•  Military spouses work and earn less than civilian counterparts, par?ally offseSng service members’ higher compensa?on

•  Military service provides extensive family supports rela?ve to civilians

•  Financial condi?ons have improved in recent years, but this is now slowing

Questions!!!!

Please enter your question in the chat box! - or Tweet your question using #MFLNPF!

Resources!

•  Arizona Pathways to Life Success!

•  Jumpstart!•  Jumpstart Clearinghouse!•  The Military Family Research

Institute at Purdue University !!

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Personal Finance Twitter Cohort!A 2-week learning experience beginning June 9 presented by the MFLN Personal Finance team and the Network Literacy Community of Practice.!!•  Become a part of a community of learners that will

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community centered around your interests.!•  Learn from guides that help new users maximize

their Twitter experience.!•  For more information and to register:

https://twittercohort.wordpress.com/!

Next Personal Finance Webinar!Small Steps to Health & Wealth!•  July 29, 11 a.m.-12:30 p.m. ET!•  Speaker: Dr. Barbara O’Neill!•  1.5 CEUs for AFCs!•  For more information:

https://learn.extension.org/events/1625#.U36U8K1dXrU!

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