Overwhelming Majority of Americans Believe Financial Literacy Should be Taught in Schools
The FINRA Investor Education Foundation (FINRA Foundation) released the results of America’s State-by-State Financial Capability Survey. The survey findings are available at www.usfinancialcapability.org, which features an interactive map of the United States, and allows the public, policymakers and researchers to delve into and compare the financial capabilities of Americans across all 50 states and the nation as a whole.
The 2012 Survey asked respondents whether they thought financial education should be taught in schools. An overwhelming majority (89%) of respondents said yes, indicating strong support for increased school based financial education. As of June 2013, only 16 states require that some sort of personal finance education be offered in high schools and only 15 states require that course for graduation. The Council for Economic Education is working with state affiliates to increase these numbers so that more students have exposure to this important topic as part of the required curriculum.
The 2012 survey found: In general, measures of financial capability are much lower among younger Americans, those with household incomes below $25,000 per year, and those with no post-secondary educational experience. African-Americans and Hispanics, who are disproportionately represented among these demographic segments, are also more likely to be vulnerable. Additionally, women tend to have somewhat lower levels of financial capability than men.
Overall financial literacy scores of respondents dropped from 3.0 correct in the 2009 study to 2.88 correct in the 2012 survey, underscoring the need for increased financial literacy education. At the same time, Americans self-perceptions of financial knowledge have increased. Nearly three-quarters of respondents (73%) gave themselves high marks (5 to 7 on a 7-point scale where 1=“very low” and 7=“very high”) compared to the 67% in 2009 who rated themselves highly. Increased financial education programming at all levels is needed to shift these results in a positive direction and align actual knowledge with the existing positive self-perceptions.
“This survey reveals that many Americans continue to struggle to make ends meet, plan ahead and make sound financial decisions—and that financial literacy levels remain low, especially among our youngest workers. No matter how you slice and dice it, this rich, new dataset underscores the need for us to continue to explore innovative ways to build financial capability among consumers,” said FINRA Foundation Chairman Richard Ketchum.
The five measures of financial capability used to rank the states measure how well Americans are managing their day-to-day finances and saving for the future. The national averages among survey respondents for these key measures are below.
- On a test of five basic financial literacy questions, the national average was 2.88 correct answers.
- Fewer than half (41%) of Americans surveyed reported spending less than their income.
- Over a third of Americans (34%) reported paying only the minimum credit card payment during the past year.
- More than half of Americans (56%) do not have rainy-day savings to cover three months of unanticipated financial emergencies.
- Over a quarter (26%) of Americans reported having unpaid medical bills.
The State-by-State Financial Capability Survey collected data on financial behaviors across all 50 states and the District of Columbia. The FINRA Foundation will make the extensive and multi-dimensional information in this study available to policymakers and researchers, allowing them to look at individual financial behavior from various angles and utilize the state-specific data to tailor new programs and policies to promote greater financial capability.
The full data set, questionnaire and methodology are available at http://www.usfinancialcapability.org/downloads.php.