American Teens Have Much to Learn When it Comes to Finance

A recent study by the Organization for Economic Cooperation and Development has ranked various countries based upon the financial literacy of each country’s 15-year olds. The results have determined that of the 18 countries surveyed, the US only ranked as high as 8th and as low as 12th (based on a range of scores). China, specifically 15 year olds in Shanghai, ranked first.

These results are rather concerning for the US, especially as 15 year olds are not far away from becoming important consumers in the US Economy. CNBC provides some further analysis on the numbers:

Among U.S. teens, 9.4 percent were top performers, comparable to the 9.7 percent of all countries in the test. But more American students fell on the lowest end of the scale than in other nations:17.8 percent did not reach basic proficiency versus 15.3 percent globally.

Domestically, students who came from higher-income families, or had a parent in a skilled occupation (especially one in finance) tended to score higher, as did students who had their own bank account. A small bright spot: Girls had mean scores of just one point lower than boys, much less of a discrepancy than in other countries.

Given the less than stellar results, an important next step should be trying to determine what the U.S. can do to better improve the financial literacy of her teens. CNBC recommends a number of different approaches:

Until a more standardized system for financial literacy is put in place, it’s largely on parents—and kids themselves—to boost their knowledge. A University of Arizona study on college students’ financial behaviors found that three things help there: Parental involvement, taking a personal finance class and having a part-time job and other hands-on money experience…

Of course, you might be part of the problem. “Sometimes parents can’t be the best teachers of financial literacy, because they don’t know themselves,” Lusardi said. Supplement with local programs and online resources, including Jump$tart, Money As You Grow, and the AICPA’s 360 Degrees of Financial Literacy

Experts also advise pushing for more personal finance in the school curriculum, lobbying both your local schools for inclusion and area businesses for sponsorship or teacher training funds.

While these steps will not necessarily turn one’s kid into a financial expert, they can help to allow teens a better understanding of some of the daily financial transactions that they will carry out almost everyday of their adult lives. This knowledge will help them to make wiser and informed decisions about their personal finances. This in turn will help America’s teens become modern and savvy consumers.

Interested to see how you would do on the test? Take CNBC’s Version Here

Read More- “What nation has the most money-smart teens? It’s not the U.S.” (Kelli B. Grant, CNBC)

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A rising senior at Colgate University, John is currently working as a research fellow with Consumers' Research.

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