From a quick glance at personal finance statistics, most will be dismayed at what they see. Individuals around the world, often lacking a solid foundation of personal financial knowledge, appear to be inept at the task of managing their own finances. Over the course of their lifetimes, many will make strategic errors in planning that will culminate in a decreased standard of living and increased stress leading up to retirement. Personal finance statistics are a wake-up call for many educators around the globe.
Borrowers who scored lowest on a test of financial literacy were in mortgage delinquency 25% of the time, compared to the 12% mortgage delinquency for those who scored highest on the assessment (Federal Reserve Bank of Atlanta). https://www.frbatlanta.org/-/media/documents/research/publications/wp/2010/wp1010.pdf
A 0.2 increase in standard deviation on a financial literacy score would result in a predicted additional $13,800 in new wealth (American Economic Review). https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3554245/pdf/nihms-400812.pdf
In a survey conducted by the National Financial Educators Council, 5.2% reported they had been turned down from a job due to a lack of financial knowledge, and 18.2% responded they were not sure (National Financial Educators Council). https://www.financialeducatorscouncil.org/financial-literacy-statistics
11.5% of 2014 college graduates have loans in default (Federal Student Aid Office of US Dept of Education). https://www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html
18% of adults cited retiring without having enough money set aside as their top personal finance worry (National Foundation for Credit Counseling). https://www.nfcc.org/wp-content/uploads/2017/03/NFCC_BECU_2017-FLS_datasheet-with-key-findings.pdf
Personal finance statistics are analyzed by financial education program directors to help them align their programs with the financial knowledge needs of the populace. Personal finance statistics representing a chasm between different groups of the population are also used by creators of public policy and directors of financial literacy initiatives in order to guide specific outreach programs targeted at specific groups. When interpreted correctly, personal finance statistics can suggest the most effective program for the most people.
Recently the National Financial Educators Council (NFEC) published the findings from an online survey with 452 adults across the U.S. This report summarizes a set of personal finance statistics regarding respondents’ opinions about a variety of financial literacy topics. The survey was developed in collaboration with Ed Hathman, Ph.D., a survey design and analysis expert widely recognized as an online data collection pioneer.
Survey responses were collected between November 12, 2012 and August 14, 2013 from organic visitors to the NFEC website (www.FinancialEducatorsCouncil.org) who agreed to complete a survey. Demographic information collected in the survey included geographical location, employment, and political affiliation. Respondents to this personal finance survey included residents of 35 U.S. States, Puerto Rico, and the Virgin Islands. An approximate 22% were educators or educational employees; 21% were financial professionals or financial institution employees; 14% worked for nonprofit organizations; 26% were students; and 17% described their current employment as “other.” The highest proportion of respondents indicated affiliation with the Democratic Party (36%), followed by Independents (24%), Republicans (23%), Libertarian (6%), and Other (12%).
One important finding among these personal financial statistics was the strong support respondents expressed for a mandate that students take a financial education course before deciding to take on a student loan. When asked if students should be required to learn money lessons before taking out a student loan, an overwhelming 96% of respondents answered “Yes,” compared to 2% “No” and 2% “Uncertain.”
These findings are interesting when juxtaposed with the results of a financial literacy quiz the NFEC recently conducted with a group of American teens and young adults. They found that less than 30% of youth were able to score higher than 70% on a test of financial knowledge and motivation.
The NFEC has addressed this clear need for financial literacy education by developing a comprehensive set of personal finance lesson plans that can be accessed by educators, parents, and students. Those who believe young people should learn about money before entering into student loan debt should contact the NFEC for information.