And they blame their parents for their ignorance
They clothe, feed, and house you for years. But your parents have failed you when it comes to your personal finance knowledge.
Equifax’s second annual financial literacy survey shows that only one-third of respondents would say they’re average when it comes to financial literacy — 40 percent gave themselves a grade of “B.” When asked where they learned their (lack of) smarts, 41 percent said their parents.
“Without an understanding of credit and your own behaviors, it can become challenging to do some of the basic fundamentals such as save for retirement, establish an emergency savings account, or move beyond living paycheck to paycheck,” says Dann Adams, president of Global Consumer Solutions at Equifax.
According to the survey, one-third of respondents believe checking your credit report impacts your credit score. Thirty percent believe an interest rate on credit cards or car loans influences credit scores, and another 23 percent believe a change in salary has an effect. None actually do.
Despite the lack of knowledge on what influences credit scores, more than 60 percent of those surveyed are confident or extremely confident about their short-term financial futures. Baby boomers were the most confident in their financial futures, while Gen Xers were the least.
Where should we get our education?
According to the Equifax survey, one in five Americans know more about national politics than they do about their own credit histories. Even though many of the respondents are taking steps to educate themselves by reading financial articles online (45 percent are doing this), 38 percent admitted they aren’t doing anything specific at all.
Just because we aren’t educated now doesn’t mean we want the same for future generations. Ninety percent believe personal finance should be a required course to graduate high school.
Financial illiteracy is a huge problem in America. Last year, an in-depth study showed that no state in the United States has an A in financial literacy, and only four states achieved an A-. Almost half got a C or worse. Mississippi was the lone state with a failing grade.
Experts believe financial literacy needs to be taught and tested at a young age, just like math or reading. Even starting in high school would be beneficial to young people to encourage them to talk about finances at home.
And home is where money talk should be encouraged. Many parents are interested in talking to their kids about saving, but that’s about it. And it could be because they don’t actually know enough about the ins and outs of money to educate their children.
Because parents are vastly misinformed about money, they are passing along their bad money habits to their children. So how can older Americans learn financial literacy?
Experts suggest workplaces as a great place to start, and employees are interested in it. Before 401(k)s and investments, employees are looking for general financial advice to teach them even the basics of saving, spending, budgeting, investing, and others. The more younger generations know about financial literacy early on, the sooner they can educate those that come after them.
Article last modified on May 22, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Americans Agree with Research: They Aren’t Financially Literate - AMP.