|3 or Fewer Correct||55%|
|4 or More Correct||45%|
|3 or Fewer Correct|
Financial literacy is strongly correlated with key measures of financial capability. Specifically, those with higher literacy are more likely to plan for retirement and to have an emergency fund, and less likely to engage in expensive credit card behaviors.
Study participants were asked five questions covering aspects of economics and finance encountered in everyday life, such as compound interest, inflation, risk and diversification, interest rates, and mortgages. The data reveal room for improvement in the levels of financial literacy among military service members.