Americans financially illiterate, poll finds


The Columbus Dispatch
By: Kurt Ludlow
April 13, 2014

Ask folks why April is an important month when it comes to personal finance, and you'll probably get a bunch of grumbling about taxes.

Most people are likely to cite the April 15 tax-filing deadline. A smaller percentage might note that April 21 has been designated "Tax Freedom Day" -- the day on which Americans, collectively, will satisfy their 2014 tax obligation. A precious few might say that April is when they collected their, ahem, taxable winnings (see IRS Form 1040, Line 21 -- "Other income") from this year's NCAA tournament pool.

Chances are, though, that few, if any, will know -- or care -- that April is National Financial Literacy Month.

And that, experts say, is the problem.

Studies suggest that an alarming percentage of Americans -- especially young people poised to enter college or the workforce -- fail to appreciate the importance of the financial fundamentals that can make or break a 21st-century household.

Sixty-one percent of adults admit to not having any sort of personal budget, according to the 2014 Financial Literacy Survey, which Harris Poll conducted last month on behalf of the National Foundation for Credit Counseling.

The widespread reluctance to set up -- and stick to -- a financial plan could explain why 65 percent of the respondents haven't looked at their credit report in the past year, 34 percent have no liquid savings and 21 percent typically carry more than $1,000 in credit-card debt each month.

For the most part, the survey found, Americans are aware of their financial shortcomings. Forty-one percent said they'd give themselves a grade of C, D or F. "This year's survey once again confirms what we already know: The need for financial education is great," said Susan Keating, the foundation's president and CEO. "Without a solid foundation on which to base everyday financial decisions, Americans are on a slippery slope as they begin to rebuild their financial lives following the Great Recession."

The Council for Economic Education, one of the forces behind the establishment of National Financial Literacy Month a decade ago, maintains that U.S. schools could, and should, do a better job of equipping students with a "real-world understanding of economics and personal finance" -- what the organization calls "the fourth R" of American education (along, of course, with reading, writing and arithmetic).

The council's 2014 Survey of the States revealed mixed results. On one hand, for the first time, all 50 states and the District of Columbia included economics in their K-12 standards. What's more, the standards in 43 states, including Ohio, feature personal finance specifically. On the other hand, personal-finance courses are mandatory in just 17 states, and testing to ensure student competency is required in even fewer states: six. Ohio is not among either of those groups. "The 17 states that require a personal-finance course today represent only about 40 percent of the U.S. population," said Nan Morrison, the council's president and CEO. "That's a huge gap, and we need to close it."

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This page contains a single entry by CFED published on April 14, 2014 6:21 PM.

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