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China vs. America: Who teaches money better?



There’s been no shortage of major news stories this summer, from Iraq to Israel to immigration. To a CPA and financial educator like myself, however, those stories weren’t any more important than this summer headline in the Wall Street Journal: American Teens Achieve Mediocrity In Financial Literacy.

How can I compare teenagers’ financial education to a Mideast war and immigration? Simple: All three will have significant and long-term impacts on our nation if we don’t address them now.

How we scored

This summer, an exhaustive 200-page study was released, and it was unlike anything I’d ever seen. Indeed, it was the first of its kind.

It was conducted by the Organization for Economic Cooperation and Development. OECD researchers tested 29,000 15-years-olds in 18 countries on topics ranging from how to read a bank statement to how to calculate the long-term cost of a loan.

Chinese teens came in first place, with a score of 603. The United States finished ninth with a score of 492 — right behind Latvia. We finished just ahead of Russia. The average score was 500, meaning the world’s economic powerhouse is pulling a D-plus.

This resulted in some not-so-good-natured joking in the Chinese media.

“You’d expect capitalists in the world’s top capitalist nation to educate their kids about the ABC’s of capitalism. Turns out American capitalists aren’t doing that,” one Chinese report began.

Why money matters

Coincidentally, I wrote about the importance of financial literacy exactly one week ago. Back in March, my editor defended financial literacy classes from “experts” who said they’re unnecessary. I wonder what those experts think now.

The significance of financial literacy can be summed up in a single question the OECD posed to the teens:

Mrs Jones has a loan of 8000 zeds with FirstZed Finance. The annual interest rate  on the loan is 15 percent. Her repayments each month are 150 zeds. After one year, Mrs. Jones still owes 7,400 zeds.

Another finance company, called Zedbest, will give Mrs. Jones a loan of 10,000 zeds with an annual interest rate of 13 percent. Her repayments each month would also be 150 zeds.

If she takes the Zedbest loan, Mrs. Jones will immediately pay off her existing loan. What are two other financial benefits for Mrs. Jones if she takes the Zedbest loan?

Do you know the answer? As the OECD puts it, this is all about the “positive consequences of transferring a loan to a lower interest rate.” Math skills aren’t even required here.

This is crucial to the financial health of this country, which is wilting under nearly $855 billion in credit card debt and more than $1 trillion in student loan debt.

For the past two decades, I’ve advised thousands of Americans on their debt problems. These are smart adults who possess complex technical knowledge about their jobs, who work long hours, and sacrifice financially for their families. But many don’t even realize how much they’re wasting in high-interest car loan, credit card bills, and mortgages.

Do we really want another generation to follow in their debt-laden footsteps? Parents always want better for their children — whether they’re from America, China, or Latvia. Let this report be a warning as the new school year begins: We need financial education now.

Howard Dvorkin is a CPA and chairman of, an educational resource for those who want to conquer all forms of debt in their lives.

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