There are a lot of shocking statistics when it comes to money in America. There is $1.26 trillion dollars of U.S. student loan debt, and 62 percent of Americans have under $1,000 in savings in the event of an emergency. Those are two very concerning statistics, but this one may be the most troubling yet: almost two-thirds of Americans failed a basic financial literacy test.
On a financial literary survey conducted by the FINRA Investor Education Foundation, 63 percent of respondents got less than half of the survey questions right. At the same time, over 75 percent of respondents gave themselves a high self-assessment of financial knowledge. FINRA’s mission is to provide the knowledge, skills and tools to help under-served Americans reach financial success, but it seems they have their work cut out for them. If you want, you can take the short, 6-question quiz here.
Five of the main questions have been on the same survey for years, and the bad news is that our financial literacy is trending downwards. In 2009, only 58 percent of respondents got three or fewer questions correct, a five percent change over the past seven years. Among the topics most challenging to respondents were compound interest rates and the relationship between bond prices and interest rates.
After the 2008 financial crisis, more Americans are wary about the state of the economy and how they can best take care of their money. The good news is that people are generally doing better overall, but that is because the economy is rebounding. Without basic financial literacy, another downturn could put many people in financial ruin once again.
According to the Council for Economic Education, only 20 states require high school students to take an economics course, and less than half require any personal finance education for graduation. A lack of emphasis on financial literacy early on might be one of the biggest contributing factors in low financial literacy rates among adults.