Financial literacy is critical to managing money, but how well do countries prepare their residents?
Tennessee tops the list of US states that offer the best financial education to its residents, according to a new report Report By the financial services company OneMain Financial. More than 99% of public high school students in Tennessee have a “Gold Reach” education, a school in which students are required to take a separate personal finance course as part of their curriculum for graduation.
The report takes into account four things: the number of active bills in the country that promote a type of financial education in public schools, the state of economic education in public high schools, the level of personal finance education offered and required, and the share of high school students in Gold Access schools.
New York, Utah, Alabama and Virginia ranked behind Tennessee. Despite the fact that only 2% of New York high school students get a “right to gold” education, the state has 11 financial and economic education bills proposed in the state this year. The other three states have over 97% of students with a gold education.
““We believe that understanding budgeting, savings, loans and credit cards as well as credit scores can prepare people for lifelong financial well-being.”“
“We believe that understanding budgets, savings, loans and credit cards as well as credit scores can prepare people for a lifetime of financial well-being,” OneMain Financial said in the report. “So we looked closely at the latest legislation and conversations to gauge how we give people as a nation access to financial knowledge.”
In total, elected officials have introduced 69 financial education bills this year in 27 states as of late October, according to Next Gen Personal Finance. Financial Education Act Tracker. NGPF is a non-profit organization It aims to provide personal and financial education to all students. Among them, 12 bills have been signed in 10 states and 8 bills are still in progress in 3 states.
Nearly twenty states require students to take a personal finance course, either independent or combined with other subjects, in order to graduate from high school, According to the Council on Economic Education. A handful of states, including Florida, passed bills in the summer of 2022 defining personal finance courses as an individual requirement.
Alaska, Wyoming and the District of Columbia have no personal finance education requirements for K-12 schools and have not seen any new bills, according to a report from the Council on Economic Education. California does not have any of these requirements in place, however A bill passed in July To start a statewide task force to look into the problem.
(OneMain Financial declined to provide its own assessment of the lowest-performing states in public personal finance education. However, the researchers said that 68% of American high school students do not understand credit scores. They further said that auto loans rank behind mortgages and student debt for the largest share of debt. family between adults.)
Consistently low performance in financial literacy among Americans
US adults have correctly answered only 50% of personal finance questions over the past six years, according to Report 2022 by the TIAA Institute, a nonprofit that is part of the Teachers Insurance and Pensions Association of the American College Retirement Equity Fund, a Fortune 100 company, and the Global Center of Excellence for Financial Literacy.
Financial literacy tends to be lowest among younger Americans, according to TIAA and GFLEC The Personal Finance Index, a list of the 28 essential questions people ask each year. On average, about 54% of Baby Boomers answered all questions correctly, while 42% of Gen Zers answered all questions correctly—a 12 percentage point gap between the two demographics. (The questions cover everything from saving, investing, and borrowing to earning, consuming, and understanding risk.)
Not only does the level of financial literacy remain low, but it has also been “stubbornly resistant to progress,” according to analysts at the Milken Institute, a nonprofit think tank based in Santa Monica, California. This finding is particularly troubling for young people, who are likely to face greater financial challenges than previous generations. In this report for 2021.
A time in need of good money management skills
The past two years have prompted many countries to consider implementing financial literacy lessons as a school requirement. The pandemic has disrupted jobs and incomes for many families, especially low-income families. The push to encourage personal finance in schools appears to have paid off in Tennessee: The state’s average credit score increased by 4 points to “good” FICO Fico Score of 701 last year.
Americans face an uncertain economic outlook. Inflation was 7.7% in October compared to a year ago, down from 8.2% in September, according to the latest government data. The rising cost of living is finally showing some signs of cooling off after inflation hit a 40-year summer high of nearly 9% a year ago. However, high inflation has already affected millions of cash-strapped families.
Federal Reserve Vice Chairman Lael Brainard indicated earlier this month that the Fed may slow down interest rate hikes. It raised interest rates six times this year, and raised the key interest rate by 0.75 percentage points in November for the fourth time. That pushed the short-term borrowing rate into the target range of 3.75% to 4%, making auto loans and credit card debt more affordable.
Consumers also reported having to dip into their emergency savings to help cover monthly bills. At the same time, American families have Become more dependent on credit cards and personal loans. Bank credit card balances totaled $866 billion in the third quarter of 2022, up 19% from a year ago, according to TransUnion TRU,