Not too long ago, CNN Money reported on an international assessment of teenagers and financial literacy. The test, which was administered to 15-year-old students in 18 countries, ranked the United States in the middle. The top results went to Chinese students, with students in Belgium, Estonia, New Zealand, and Australia also scoring quite well. In the United States, close to 20 percent of students didn’t even reach what is called “baseline efficiency.”
This brings up interesting questions surrounding financial literacy. Recent contentions that most adults fail basic financial literacy quizzes indicate that what students aren’t learning in school is catching up with them as adults.
The result is that we, as a nation, tend to struggle with basic financial concepts — with our money situations suffering as a result.
Education, Wealth, and Financial Literacy
It’s important to note that the Chinese students tested weren’t spread throughout the population; though more than half of them were considered top performers, the only students who took the test lived in Shanghai. Shanghai is a larger and wealthier city, and generally its inhabitants receive a better education they they would in a rural area. It seems obvious that people with more wealth and education are more likely to teach their children about money, and are more likely themselves to have a better grasp of financial concepts that lead to long-term success with money.
More importantly, the countries that performed the best, including Australia, have financial literacy lessons included in their national curricula.
Math, language, and science lessons all include financial literacy topics. By contrast, in the United States, curriculum is set by the states — and less than half of them include financial literacy lessons in the classroom.
While teaching financial concepts for a short amount of time in the classroom isn’t likely to turn our country into a nation of financially savvy citizens, it would help create a solid foundation. And hopefully the concepts would be reinforced at home so they’d be truly effective.
There are no easy solutions to these problems, but more education would undoubtedly help. There’s a good chance that, as a country, we could become better with money — and better face the challenges of the future — if we had a little more financial literacy education, and if we paid attention to it with the same interest we have for the lives of celebrities.
Do you think we have a financial literacy problem? How would you try to solve it?