Consumers Respond to Market Turmoil by Saving More, Cutting Debt.

First Command Financial Behaviors Index Falls to Record Low in Third Quarter amid Rising Concerns about the Cost of Daily Goods, Personal Debt and Job Security

FORT WORTH, Texas -- As national economic conditions worsened in the third quarter, Americans began putting their personal financial houses in order by increasing their short-term savings and paying more on short-term debt, according to the First Command Financial Behaviors Index.

The financial behaviors, attitudes and intentions of U.S. consumers remained depressed during the third quarter of 2008, causing the Financial Behaviors Index to dip to 85 in September - a record low. Consumer attitudes took the biggest hit, dropping 18 points from June.

"Concerns about the cost of daily goods, personal debt and job security are all on the rise," said Scott Spiker, CEO of First Command. "Our research shows a significant downturn in consumer sentiment on feelings of financial security, optimism and being financially stretched on a month-to-month basis."

More than half (54 percent) of respondents indicated they were concerned about the cost of daily goods, up six points from February. Forty percent of respondents expressed concern about personal debt, up eight points from February. And 25 percent of respondents were concerned about job security, up five points from February.

At the same time, the Index recorded that consumers are responding to the economic conditions by making positive, immediate changes in their savings and debt reduction behaviors. Short-term savings for the typical family totaled $901 in September, up 29 percent from $696 in June. And payments on short-term debt totaled $1,010 in September, up 8 percent from $938 in June. These actions helped to generate a 12-point rise in the consumer behavior sub-index from June to September.

"American families are reacting to the economic turmoil by focusing on improving their savings-to-debt ratios," Spiker said. "Their behavior is consistent with a 'buttoning-down' during tough economic times."

However, this positive behavior may be short-lived. The Index showed that consumer intentions fell 10 points in September, suggesting that savings and debt reduction behaviors could drop again next quarter. Fewer consumers indicated that they will put more money into savings and investments next month. Additionally, fewer indicated that they will increase the amount they pay on their debt.

Interestingly, consumers with a financial plan registered a higher score on the Index (97) than respondents without a financial plan (80). The data shows that while the Index among those without a financial plan decreased five points in the current quarter, the Index among those with a financial plan actually increased four points.

"These data indicate that having a financial plan provides a buffer in financial security during uncertain economic times," Spiker said. "In fact, American families with a financial plan are nearly twice as likely to report that they feel very or extremely confident about their ability to retire comfortably, when compared to those without a financial plan."

Again in the third quarter, the Index revealed a gender gap in which women registered a lower consumer attitude score than men (78 versus 93).

However, women with a financial plan report relatively similar feelings of financial security as men with a financial plan. And significantly more women with a financial plan feel confident in their ability to retire than women without a plan. In some reporting months, this difference is approximately 20 points or more.

"A financial plan appears to be an equalizer to the gender gap in feelings of financial security," Spiker said.

About the First Command Financial Behaviors Index

Compiled by Sentient Decision Science, LLC, the First Command Financial Behaviors Index assesses trends among the American public's financial behaviors, attitudes and intentions through a monthly survey of approximately 1,000 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 3.1 percent with a 95 percent level of confidence.

About Sentient Decision Science, LLC

Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index. Sentient is a full-service market research firm with special vertical expertise within the financial services industry. Sentient specializes in advanced research design and statistical analysis of behavioral and attitudinal data.

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams--focusing on consumer behavior as the first and most powerful determinant of results. Through personalized financial plans that emphasize accumulating wealth while reducing risk, First Command Financial Advisors have established lasting relationships with hundreds of thousands of client families since 1958.

First Command Financial Services, Inc. is the parent company of First Command Financial Planning, Inc. (Member SIPC, FINRA) and First Command Bank (Member FDIC). Insurance products and services are offered by First Command Financial Services, Inc. Financial planning services and securities products are offered by First Command Financial Planning, Inc. Banking products and services are offered by First Command Bank. Securities products are not FDIC insured, have no bank guarantee and may lose value. In certain states, First Command Financial Services, Inc. is a separately registered domestic corporation and does business in California as "First Command Insurance Services."