No state in the union has an A in financial literacy
Most of pre-adulthood is spent learning geography, math, English, maybe a foreign language — but not the crucial adult skill of money management.
And it looks like our lack of financial education hurts in the long run. The new financial literacy study from Champlain College shows that no state in the country earns an “A” grade on teaching and knowing about money. In fact, only four states got an A-, and almost half got a C or worse. Mississippi was the lone state to get an F.
“Financial sophistication is an essential 21st century life skill that people need to succeed, yet recent studies and surveys show that our citizens have not mastered these topics,” says John Pelletier, director at Champlain College’s Center for Financial Literacy. “The basics of personal financial planning — like the value of money; how to save; invest and spend it and how not to waste it — have not been taught in school or at home.”
This is Champlain’s first in-depth report on adult financial literacy. Pelletier says other groups, like high schoolers, are studied every two years. He says the biggest revelation of this first-ever study wasn’t just the lack of financial literacy, but the drastic difference in the states.
“I think the biggest surprise in putting this report together is the large variances between the best and worst state on the data points,” he says. “Every state, even those with the best grades, have a lot of room for improvement.”
The worst offenders
While Mississippi has the only failing grade, there are plenty of others that didn’t do so hot. Alabama, Oklahoma, Arkansas and Louisiana all got Ds. South Carolina, Kentucky, New Mexico, West Virginia, Texas, Georgia and Florida all got D+s. Those states alone make up more than one-quarter of the U.S. adult population.
According to the report, financial illiteracy was one of the causes of the Great Recession. “To minimize the impact of any future financial crisis, Americans must be educated in personal finance.”
Even those states earning high grades are just the best among a large group of low-performing states, so don’t be fooled by states who have a passing grade. States that received a C grade or above make up less than half — 45 percent — of the U.S. adult population. That means most of us live in less-than-stellar states.
What can we do now?
Learning how to handle money can be a big step for those that have gone so long without a clue and formed bad habits. But Pelletier says if we don’t do something now, we’re only hurting our future.
“Without improved financial literacy, the next generation of America’s leaders, job creators, entrepreneurs and taxpayers will not have the skills they need to survive and to thrive in this increasingly complex financial world,” he says.
The report says a big problem with financial literacy is that it isn’t taught to us when we are young.
“We must take the subject of personal finance seriously in high school, college and beyond,” Pelletier says. “It needs to be a priority, like math and reading.”
Since adults are the hardest to reach, he says the workplace would be the best place to start. Some employers are already doing this, but not enough push it seriously.
“Employers are starting to recognize that retirement plan training is not enough — their employees also need general financial advice,” he says. “It is in the interest of employers to provide their employees with financial education in the workplace to help minimize financial stress and increase productivity.”
Article last modified on December 13, 2016. Published by Debt.com, LLC .