A new study has found that a majority of Americans are deficient when it comes to basic financial literacy.
The National Capability Study, conducted by the FINRA Investor Education Foundation, surveyed 27,564 Americans from June to October of last year. It found that nearly two-thirds of Americans weren’t able to pass a basic test measuring financial literacy— passing meant getting four out of five questions correct.
A couple of the financial concepts with which the participants struggled include:
- Interest payments (only one-third were able to calculate them correctly, and an additional third didn’t know where to start)
- Bond prices (only 28 percent knew that bond prices rise when interest rates fall)
- Financial risk (less than half of Americans were able to correctly answer questions related to risk)
Although their financial literacy is clearly lacking, it doesn’t appear as if Americans necessarily struggle in terms of savings.
From 2009 to 2015, those reporting that they had no difficulty paying bills increased from 36 to 48 percent of Americans.
Likewise, those who had emergency funds increased from 35 to 46 percent of individuals over the same time period.
Wide swaths of Americans still find themselves struggling, however. Some groups that are still worse off as a whole than before the Great Recession include Hispanics, Millennials, women, blacks, and those without a high school diploma.
21 percent of Americans have unpaid medical debt. 39 percent of blacks and 34 percent of Hispanics have used high-cost borrowing services, like pawn shops and payday loans— this can be compared to 21 percent of Asians and whites.
Clearly, Americans are in a better place now than in previous years, but there is still big room for improvement.
