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New report finds only 16% of millennials qualify as ‘financially literate’ (& less than half of everyone else)


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Posted

https://finance.yahoo.com/news/a-new-report-finds-only-16-of-millennials-qualify-at-financially-literate-195635534.html

For a new report on financial literacy, Americans were asked three “very fundamental questions” to test financial literacy.

Among millennials, only 16% correctly answered all three.

Dr. Andrea Hasler, one of the authors of the report, appeared on Yahoo Finance’s “On the Move” to discuss the findings. "The problem here is that financial literacy is highly linked to money management behavior and saving and planning for retirement," she says.

The multiple choice questions covered broad concepts of numeracy, inflation, and diversification:

1) Suppose you had $100 in a savings account, and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? Answers: a) More than $102; b) Exactly $102; c) Less than $102; d) Do not know; e) Refuse to answer.

2) Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? Answers: a) More than today; b) Exactly the same; c) Less than today; d) Do not know; e) Refuse to answer.

3) Please tell me whether this statement is true or false. “Buying a single company’s stock usually provides a safer return than a stock mutual fund.” Answers: a) True; b) False; c) Do not know; d) Refuse to answer.

Even the millennials who self-identified as financially literate struggled. Only 19% of that group were able to answer the three questions correctly.

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Posted

1) that doesn't shock me.

2) I wonder if that stat is really generation-specific, or if it's more age-specific?

That is, had you polled previous generations (Gen X, Boomers, etc) at the same age, would they have performed similarly?

My hypothesis: young people are naive, stupid, and not very well-informed.  As a former young person, I can vouch for this hypothesis.  I may have been slightly more financially literate than most, but I wasn't super savvy in my early 20s.

  • Like 2
Posted

There’s a big difference between knowing the answers to these questions and putting sound investment strategy into practice. I’m a millennial and got all 3 questions correct but would not consider myself financially literate in the slightest, at least in practice.

  • Like 2
Posted
  On 2/28/2020 at 10:04 PM, NeverMarryAStripper said:

If you couldn't get those three question correct you should just shoot yourself in the head and get it over with. 

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What you don't realize -- most of us don't -- is how breathtakingly stupid the average American is.  Seriously, if you are a college-educated professional, odds are good that even the biggest idiot in your peer group is among the top 1/3 (probably top quarter) of Americans.  That is, think of the biggest idiot you know....then realize that 2/3 of Americans are dumber than that guy.  Shit, check out this fantastic stat:

  Quote

a study reported  by the New York Times entitled “Half of the Adults in the U.S. Can’t Read” revealed a growing “marginal illiteracy” problem, where 50% of Americans – “nearly half of the nation’s 191 million adult citizens are not proficient enough in English to write a letter” and have difficulty in “practical matters that people face every day.” They have difficulty with reading comprehension, filling out documents, understanding and summarizing facts in an article or writing a paragraph summarizing information. 

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We are a nation of morons.  Intelligence is the exception.

  • Like 4
Posted
  On 2/28/2020 at 6:06 PM, Brisketexan said:

1) that doesn't shock me.

2) I wonder if that stat is really generation-specific, or if it's more age-specific?

That is, had you polled previous generations (Gen X, Boomers, etc) at the same age, would they have performed similarly?

My hypothesis: young people are naive, stupid, and not very well-informed.  As a former young person, I can vouch for this hypothesis.  I may have been slightly more financially literate than most, but I wasn't super savvy in my early 20s.

Expand  

Young people? Early 20s? I think Gen Z starts in 1995 so millenials are barely clinging to the early 20s and many are pushing 40.

I'm an elder millenial myself and most millenials i meet are just stupid fucking broke dick losers, so these results make sense to me. 

  • Like 1
Posted
  On 2/28/2020 at 10:50 PM, B00M said:

Young people? Early 20s? I think Gen Z starts in 1995 so millenials are barely clinging to the early 20s and many are pushing 40.

I'm an elder millenial myself and most millenials i meet are just stupid fucking broke dick losers, so these results make sense to me. 

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Well, as a Gen-Xer, I ain't so good with the maths myself.

Posted
  On 2/28/2020 at 10:51 PM, Brisketexan said:

Well, as a Gen-Xer, I ain't so good with the maths myself.

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In your defense, the study in OP claims millenials are as young as 20 today which doesn't jibe with google... '96 is apparently widely accepted as the last birth year for millenials. 

Posted (edited)

We learned enough basic accounting and finance in our HS home economics class to answer all three questions.   HE isn’t even a math class.  Is HE not required anymore?  

Edited by SDG
Posted

My 16 yo son asks me financial questions all the time, and I always spend time explaining it to him in detail.  He's smart as a whip.  My 14 yo daughter probably couldn't figure out how many quarters in a dollar.

  • Like 1
  • Haha 1
Posted
  On 2/28/2020 at 11:10 PM, SDG said:

We learned enough basic accounting and finance in our HS home economics class to answer all three questions.   HE isn’t even a match class.  Is HE not required anymore?  

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Shut up, bake some cookies, and wash my socks.

Posted (edited)

Edited to add: What dingleberry said, but make it a required course for all.

Seriously, I always thought every high school kid should take a required course in home economics-household management-financial applications-how to do shit.

Edited by Armybrat
  • Like 1
Posted
  On 2/29/2020 at 12:03 AM, dingleberryswitzer said:

As far as I know, Economics is still a required class in high school, and calculating interest is taught in algebra 2 and maybe precal and the remedial math classes.  There is also Finance and something called "money matters" as electives.  

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I always wonder whether it's "money matters" as in matters involving money, or "money matters" as in money MATTERS dammit!

Posted
  On 2/28/2020 at 10:50 PM, B00M said:

Young people? Early 20s? I think Gen Z starts in 1995 so millenials are barely clinging to the early 20s and many are pushing 40.

I'm an elder millenial myself and most millenials i meet are just stupid fucking broke dick losers, so these results make sense to me. 

Expand  

Yep, I'm the younger end (92) of the spectrum. I've learned that hard work equals money, but nothing about how to invest into a market, which I'm leaning now. Would have been nice to learn this back in school. 

Posted

I'm helping my dad plan his retirement right now. It's astounding how much he doesn't know about anything other than these 3 things and doesn't know how to spend money on anything other than buying stocks lol

Posted (edited)
  On 2/28/2020 at 10:33 PM, Brisketexan said:

a study reported  by the New York Times entitled “Half of the Adults in the U.S. Can’t Read” revealed a growing “marginal illiteracy” problem, where 50% of Americans – “nearly half of the nation’s 191 million adult citizens are not proficient enough in English to write a letter” and have difficulty in “practical matters that people face every day.”

Expand  

It's this new math that's throwing everyone off. When I grew up, 50% was known as "exactly half", but today I guess its "nearly half."

Edited by Blotto
Posted (edited)
  On 2/29/2020 at 1:32 AM, GRHorn said:

Coincidence that the lowest levels of “financial literacy” are in the same population as those with the highest opinion of socialism?

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Cloak Room son. Negged. 

Edited by gmr548
Posted (edited)
  On 2/28/2020 at 6:06 PM, Brisketexan said:

1) that doesn't shock me.

2) I wonder if that stat is really generation-specific, or if it's more age-specific?

That is, had you polled previous generations (Gen X, Boomers, etc) at the same age, would they have performed similarly?

My hypothesis: young people are naive, stupid, and not very well-informed.  As a former young person, I can vouch for this hypothesis.  I may have been slightly more financially literate than most, but I wasn't super savvy in my early 20s.

Expand  

People in their early twenties may be Gen Z, depending on which cutoff you use for generations. Your average Millennial is closer to 30. 

Edited by ImissWallyPryor
Dammit, BOOM beat me.
  • Haha 1
Posted
  On 2/29/2020 at 1:53 AM, Blotto said:

It's this new math that's throwing everyone off. When I grew up, 50% was known as "exactly half", but today I guess its "nearly half."

Expand  

Maybe it was 49.8%, but the author didn't want to confuse the average reader with those tricky decimal thingies.

Posted
  On 2/29/2020 at 3:00 PM, Onboard 2.0 said:

That surprises me. The kids I know seem to be already more focused on retirement and savings than we were, even though they still live at home. The whole SS isn't gonna be there for me concept seems to spur on the concept.

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FIFY

Posted

Boomers sure had good financial literacy when they caused the 2008 financial crisis by leveraging 20x+ while press ganging their kids into tens of thousands of student loans because otherwise they "have no future"

Fuck outta here with this grocery store checkout line headline lol

  • Like 2
Posted

I think kids today are at a disadvantage over prior generations when it comes to have sense about money.  My parents ("greatest generation") rarely wrote checks, they paid cash, so they had a sense of when funds were running low.  I wrote checks for everything, but had to balance my check book and (reconcile) with the bank statement. Having to do that forced you to review where your money was going.  Kids today have debit cards, rarely write a check, and the up to date balance is available 24/7.  But they've lost the sense of knowing where their money is going, or even see money the same way we old timers did.

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