Facts about financial literacy paint a vivid image of financial competency among different groups of the population. A plethora of research papers and reports have yielded facts that illustrate the dismal state of financial knowledge among the public—especially among women, minorities, and other groups that would benefit economically from improved financial literacy. Financial literacy facts are used to both raise awareness about financial literacy and also help construct targeted curriculum that covers the financial needs of program participants.
Borrowers who scored lowest on financial literacy tests were in mortgage delinquency 25% of the time, compared to the 12% mortgage delinquency for those who scored highest on the assessment. https://www.frbatlanta.org/-/media/documents/research/publications/wp/2010/wp1010.pdf
Households that scored higher on a specially constructed savings index were found to be more likely to own a checking account and have an emergency fund. https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf
North Dakota, which ranked 4th out of all 50 states on a financial literacy assessment, had the highest percentage of respondents at 55.5% declare they had an emergency fund. http://www.usfinancialcapability.org/downloads/NFCS_2015_State_Rankings.pdf
Pregnant or parenting teens are more concerned about learning to save for a home in the future than learning how to save for college. https://youth.gov/youth-topics/financial-capability-literacy/facts#_ftn8
While it is easy to feel discouraged after analyzing financial literacy facts, we must not believe that financial literacy for all individuals is too daunting of a task. The same reports and academic papers that produce such dismaying financial literacy statistics also affirm the promises of smart financial education programs. Financial education programs based on best practices have been shown to imbue learners with the knowledge they need in order to enact real changes in their financial behaviors.
Why do our kids need to learn about money? To paraphrase the Federal Reserve Chairman Ben Bernanke financial literacy quote, because widespread problems like the subprime mortgage market and the resulting rash of foreclosures and bankruptcies serve to illustrate how vital such lessons have become in today’s world. Here are a few more financial literacy facts that underscore this need:
- 58% was the average score on a recent national financial literacy test among 1,309 teens and young adults.
- Financial issues are cited most frequently as the reason why college students drop out of school.
- Yet 84% of college students now have credit cards; 50% of them have more than four cards.
- The age range 18-25 is the fastest-growing segment for bankruptcy.
You only need to do a simple Google search to turn up more financial literacy articles backing up these alarming statistical trends. Clearly kids do need to complete practical money education, ideally using lessons that will give them a head start toward financial success.
Before you start seeking a program, it’s important to define financial literacy. The term has been defined in various ways, but probably the most succinct and inclusive definition was coined by the National Financial Educators Council (NFEC): “Financial literacy means possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual’s personal, family and global community goals.”
The NFEC is one of the top providers of financial literacy education in the U.S. and around the world. They partnered with a team of financial and educational experts to develop their materials, which include financial literacy curriculum, workshops, multimedia learning centers, games, and live events. All these materials are designed to be interactive and engaging, thus addressing the need for money education and helping our nation’s youth avoid becoming a statistic.