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Help! Majority of Americans Fail Another Basic Financial Literacy Test

Help! Majority of Americans Fail Another Basic Financial Literacy Test

Americans have failed yet another test intended to analyze how the country performs when it comes to financial literacy.

Results are out from last year’s National Financial Capability Study, and they’re not pretty.

Out of 27,564 subjects surveyed, 61 percent could not get 3 out of 5 money-related questions right, said Jezebel.

The questions covered “aspects of economics and finance encountered in everyday life, such as compound interest, inflation, principles relating to risk and diversification, the relationship between bond prices and interest rates, and the impact that a shorter term can have on total interest payments over the life of a mortgage.”

Other aspects of the survey revealed exactly why it’s a problem that Americans aren’t familiar with these topics.

For instance, “[m]ore than one in five Americans (21 percent) have unpaid medical debt, and women are more likely than men to put off medical services due to cost, such as seeing a doctor, buying needed prescriptions or undergoing a medical procedure.”

Further, most respondents could not come up with money in the event of an emergency and have made late payments on their mortgage.

On the bright side, the percentage of respondents reporting no difficulty making monthly payments is on the rise since the last survey in 2009.

Regardless, this survey is just another in a series of many that indicate financial literacy education needs to be prioritized in K-12.

Many states do not have requirements for students to take any sort of financial literacy education and those that do typically have minimal requirements at best.

As more and more students are being expected to pay for some if not all of their higher education costs, advocates argue that financial literacy education is more important now than ever.

48 percent of families now require students to pay for their own higher education costs, increasingly on the rise from years prior. Financial literacy education not only teaches students how to be more responsible with money, it also teaches them how to be savvy about applying for financial aid. As it stands, only 44 percent of families applied for federal financial aid this year, indicating many missed opportunities for families across the country.

Analyzing the data and looking specifically at states that require a high school economics class to be taken, have financial literacy written into state standards and include standardized testing on the subject doesn't provide too much information on how helpful such measures are yet. Comparing these states (like Georgia and New Mexico) to national data does not reveal  a significant difference in financial responsibility between residents, but this could be because many of the students who went through the respective states’ financial literacy programs are not yet entered into the workforce.

Want to know how financially literate YOU are? Take this test from FINRA.  Read more about the latest study here.

Nicole Gorman, Education World Contributor

7/13/2016

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