The U.S. Department of Treasury with the FINRA Investor Education Foundation have just released their results from a national survey of about 1,500 Americans.
Most significantly to us, this report revealed a large gap between the survey respondents’ self-assessed knowledge of financial and math knowledge and their actual behavior.
While most respondents self-reported their financial knowledge as high or very high, the report showed that less than 10% of them were able to answer all the basic financial knowledge questions correctly. For example, the survey showed that a quarter of those who gave themselves the highest score of 7 in their self-assessed financial knowledge did not know the answer to a basic question about risk and diversification.
Additionally,
When asked how well they deal with day-to-day financial matters (such as managing checking accounts and credit cards and tracking expenses), half of respondents with credit cards and checking accounts (50 percent) gave themselves the top score of 7. However, one-quarter of these respondents separately indicated they engaged in behaviors that generate fees or high costs (such as using credit cards for cash advances, paying late payment or over-the-limit fees or overdrawing their checking accounts). Among those who gave themselves a score of 6, 40 percent engaged in these fee- and cost-generating behaviors.
So what does this mean for financial educators? It means we need to do a better job of not only providing the knowledge and the right tools to help people with their personal finance issues, but to really make sure they understand and are able to use the tools in a practical way.
Now, how do financial educators get that done? That’s the BIG question, isn’t it? Obviously what we’ve been doing has either not been enough or isn’t working. If you have any suggestions we want to hear them in the comments.
Look for the results of a state-by-state survey and a survey of military personnel to be released in the future.
great article, so helpfull.
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