Improving Financial Literacy
Each year, the National Financial Educators Council releases a National Financial Literacy Test, which is taken by Americans of all ages, financial positions, and backgrounds. The test measures participants’ knowledge as it pertains to earning, saving, and growing their money.
As of 2020, the average score of 15- to 18-year-olds who took the test stood at 68 percent, just shy of a passing score. In fact, of the 60,813 people who have taken the test since it began in 2015, only 59 percent received a passing score of 70 percent or higher. Additionally, the National Financial Educators Council also released results which found that poor financial literacy contributed to Americans losing an average of $1,634 each in 2020. That is a cost of about $415 billion to the country at large.
Those numbers may seem a tad apocalyptic, but there is a silver lining. Younger generations of Americans appear willing and able to learn more about financial literacy. The National Financial Educators Council asked 1,101 young adults ages 18 to 24 what high school-level course would have benefited their lives the most. The majority (51.4 percent) responded with “money management.”
It appears financial literacy classes really do help. The FINRA Investor Education Foundation’s State Financial Education Mandates study found that Georgia, Idaho and Texas all saw increased credit scores and lower delinquency rates on credit cards three years after implementing a financial education mandate in public schools. Additionally, all three states saw significant improvements in participants’ scores on the National Financial Literacy Test with an overall 8 percent rise in score among 15- to 18-year-olds.
How to improve your financial literacy
April is Financial Literacy Month. Both a celebration and a challenge, this month is a chance for your members to reflect on the state of their personal finances and an opportunity to improve their financial well-being, one step at a time. Help your members along their financial literacy journey with some suggestions from Athene:
- Subscribe to financial newsletters – Financial newsletters from trusted sources can put free financial news in your inbox. To start, try Athene’s Smart Strategies, designed to help you take your financial journey to the next level with expert advice on finances and lifestyle.
- Listen to financial podcasts – Podcasts can help you brush up on financial information while you are on the go. For ideas, check out S. News and World Report’s Best Personal Finance Podcasts to Listen To.
- Read personal finance books – Explore Insider’s 17 best personal finance books for 2021 to get you started.
- Start keeping a budget – All the general financial know-how in the world will not mean much if you do not know where your own money is going each month. Start tracking your spending and set up a budget using a simple spreadsheet or applications.
- Talk to a financial professional – Sometimes, you just need to ask an expert. Financial professionals, like those at ProMedica FCU, can help you assess your current situation and help you stay on a track that works best for you.