FIRST COMMAND FINANCIAL BEHAVIORS INDEX TAX REFUNDS April 7, 2014

Background and Methodology The First Command Financial Behaviors Index examines financial behaviors, attitudes, and intentions among U.S. consumers. The Index was launched in February 2008 by First Command Financial Services, Inc. and Sentient Decisions Science, an independent market research and consulting firm. The research is based on a monthly survey of approximately 530 U.S. consumers, ages 25 to 70 with annual household incomes of at least $50,000. Survey respondents are asked questions related to savings, investment and credit behaviors, future intentions and attitudes about financial security. The survey is conducted online, and includes both General Population and Military households, with the sample stratified as follows: General Population n=340 Military Population n=200 2

In the March 2014 Index survey, the majority of Military (64%) and just over half of General Population households (53%) indicate having received a refund on their 2013 taxes.  The proportion of Military and General Population households having received or expecting to receive a refund is higher for the 2013 than for the 2012 tax year (Military 83% from 78%; GenPop 73% from 61%).  Additionally, more Military than General Population households indicate a refund this year (83% vs. 73%). FBIFeb0110: Did you receive a tax refund this year from the federal government? Tax Refund Status   /  significant increase / decrease from previous year at 95% confidence level; alpha indicates significant difference between Military and General Population 3    NOTE: Lift in “received” tax refund in March 2014 is attributed to fact that the tax refund questions were asked in February in 2013 and 2012 and in March in 2014.

In 2014, the majority of Military and Gen Pop households used / plan to use their refund to put into general savings and / or pay down debt (72% & 67%).  This represents an increase from last year in allocation of tax refund dollars to general savings among Military households.  Military families are more likely than Gen Pop families to direct their tax refund towards an investment account and/or to open or pay into a college savings fund.  Conversely, Gen Pop households are more likely to indicate directing their refund towards future taxes. FBIFeb0210: What did you do with this year’s tax refund or what do you plan on doing with this year’s tax refund? Choose all that apply.  /  significant increase / decrease at 95% confidence level; alpha indicates significant difference between Military and General Population Tax refund plansMilitary (a)General Population (b) Put into general savings Pay down debt Pay monthly bills Build an emergency fund Home improvements Vacation Consumer purchases Prepay major bills or payments Apply to future taxes Put towards investment account Dining out Open or pay into college savings Other b 4 b a   

Almost half of Military families both with an without a Financial Planner plan to use their refund to pay down debt and/or put their refund into general savings. FBIFeb0210: What did you do with this year’s tax refund or what do you plan on doing with this year’s tax refund? Choose all that apply. Tax Refund Plans among Military Families With vs. Without a Financial Planner  Military families who do not have a financial planner are significantly more likely to use their tax refund to pay monthly bills. 5 * Indicates significant difference between with/without a financial planner at a 95% confidence interval

The majority of Military and Gen Pop households planning to use their tax refunds towards general savings and / or to pay down debt have been doing this for three plus years. 6 How long have you been doing the following with your tax refund? Military (a)General Population (b) Number of Respondents This is the first time Second year in a row Third year More than three years Number of Respondents This is the first time Second year in a row Third year More than three years Put into general savings 7111%17%4%68%8613%7%10%70% Pay down debt 7315% 8%62%9725%15%11%48% Pay monthly bills 3123%10%3%65%4823%15%4%58% Build an emergency fund 2313%30%13%43%3225%19%9%47% Home improvements 1828%11% 50%2952%10%3%34% Vacation 2631%27%-42%2928%24%10%38% Consumer purchases 1619%31%-50%1729%6% 59% Prepay major bills or payments 633%17%-50%1443%29%- Apply to future taxes %22%11%33% Put towards investment account 287%11%7%75%1729%-12%59% Dining out 5-20%-80%1118%--82% Open or pay into college savings 1217%25%8%50%1100%--- Alpha indicates significant difference between Military and General Population  Military and Gen Pop households behave very similarly with their tax refunds.  The majority of both Military and Gen Pop households have been using their tax refund in the same way for more than three years. FBIFeb0210a: How long have you been doing the following with your tax refund?

The majority of respondents who indicated they would use their tax return to pay down debt plan to use their return to pay credit card debt.  The percentage who indicate using their tax refund to pay down debt by specifically paying off credit card debt increased for both Military and Gen Pop in 2014 compared to the FBIFeb0111a: What type of debt did you or will you pay down using your tax refund?  /  significant increase / decrease at 95% confidence level; alpha indicates significant difference between Military and General Population Type of debt paidMilitary (a) 2014 N=73; 2013 N=74; 2012 N=63 General Pop (b) 2014 N=97; 2013 N=66; 2012 N=96 Credit card debt Auto loan debt Mortgage loan debt Personal loan debt Student loan debt Home equity loan / credit debt 7   

The majority of respondents who indicated they would use their tax return to pay bills plan to put these dollars towards their mortgage or rent.  However, both Gen Pop and Military households are less likely to use their tax return towards their mortgage or rent compared to last year.  Among Gen Pop households use of tax returns for cable bill payment decreases significantly from the previous year, while use of tax returns for Internet bill payment increases significantly from one year ago. FBIFeb0111b: What type of bills did you or will you pay down using your tax refund?  /  significant increase / decrease at 95% confidence level; alpha indicates significant difference between Military and General Population Type of bills paidMilitary (a) 2014 N=31; 2013 N=25; 2012 N=20 General Pop (b) N=48; 2013 N=38; 2012 N=47 Mortgage / rent Cable Internet Telephone Electric Water Heat / Oil 8

The majority of Military and Gen Pop families monitor credit card and bank statements closely. FBIMar0110: Please indicate how often you do each of the following. alpha indicates significant difference between Military and General Population Proactive Financial Behaviors - March 2014  Over half of all families also indicate monitoring paystubs very/extremely often.  Military households are more likely that Gen Pop Households to monitor their stock investments, and check their credit score, interest rates on deposit accounts, and loan rates on loan accounts. 9 b b b b