Most Americans are by now aware that the USA typically lags behind other industrialized nations when it comes to education in such things as math, science, history, geography, and language. To add insult to injury a new study reveals that American students are also getting failing grades when it comes to financial literacy – or in other words, their understanding of personal finance and how it works.
The Jumpstart Coalition, a nonprofit organization dedicated to increasing financial education among young people, conducts a biannual survey intended to measure financial knowledge. Their latest information from the 2008 survey indicates that the majority of high school seniors score less than 46 percent – out of a possible grade of 100 percent. Other research and similar studies confirm these averages. The results underscore the fact that today’s students are flunking out when it comes to understanding things like taxable income, interest rates, and other terminologies or concepts related to finance.
Meanwhile a 2009 report that was produced for the National Bureau of Economic Research found that people who know less about the financial system tend to accumulate more debt while they pay only the minimum due on their credit card balances. That means they wind up paying about 50 percent more in fees and charges than the average credit card customer. The bottom line is that unless we start teaching our kids about financial matters they will grow up to be debtors who cannot manage their money wisely. That kind of irresponsible and uneducated financial behavior was largely responsible for the recent recession, so it is in the best interest of everyone in the country to take steps toward improving financial literacy. Legislators in GA and other regions of the USA are already hoping to support financial education initiatives, and financial literacy classes may soon be mandatory at some schools and colleges.
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