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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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clapclapclap

clapclapclap 9000

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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.

Spoiler

(The answers were “a”; “c”; and “b.”)

As the report notes, the millennials (defined as individuals 18-37 in 2018) “demonstrate lower basic financial literacy levels while at the same time being more likely to overestimate their own financial knowledge.”

Americans across all age ranges struggled with the questions, but the knowledge holes were most glaring among young people. For example, 49% of respondents aged 70-74 correctly answered the big three questions. No age group scored above 50%.

But financial literacy is arguably more important for the young. “Students have very difficult questions very early in their lifetime,” says Hasler. “For example, right after high school, how to fund their college.”

The study, titled “Millennials and Money: The State of Their Financial Management and How Workplaces Can Help Them,” was from the Global Financial Literacy Excellence Center at the George Washington University, supported by the TIAA Institute.

It was based on analysis of data from the 2018 National Financial Capability Study. 

Hasler, a professor of financial literacy, appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans. 

[Read more: Retirement planning 101]

Gaps in knowledge alongside $1.6 trillion in student debt

The lack of financial literacy intersects directly with the student loan crisis; statistics show Americans have $1.6 trillion in outstanding debt, working out to $29,200 per borrower.

According to the TIAA report, 43% of millennials have a loan. And of those that are currently working off their loan, 47% of respondents reported that they did not look into what their monthly loan repayment bill would be at the time they decided to accept a loan.

The challenge is getting young people educated and then out of debt and on the path to savings while they still have time for the money to grow. As Hasler says, she often tell her students "compound interest even works when we’re asleep."

 

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Brisketexan

Brisketexan 105479

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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.

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Brisketexan

Brisketexan 105479

Posted
Posted
19 minutes ago, NeverMarryAStripper said:

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

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. 

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

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B00M

B00M 6519

Posted
Posted
4 hours ago, 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.

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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Brisketexan

Brisketexan 105479

Posted
Posted
Just now, 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. 

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

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B00M

B00M 6519

Posted
Posted
Just now, Brisketexan said:

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

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. 

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Armybrat

Armybrat 40942

Posted
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
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ztejas

ztejas 43605

Posted
Posted
1 hour ago, 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.  

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

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workswithseed

workswithseed 2121

Posted
Posted
2 hours ago, 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. 

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. 

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Blotto

Blotto 23601

Posted
Posted (edited)
3 hours ago, 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.”

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
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ImissWallyPryor

ImissWallyPryor 9046

Posted
Posted (edited)
19 hours ago, 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.

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.
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aggie08

aggie08 21561

Posted
Posted
11 hours ago, 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."

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

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Iceman

Iceman 2728

Posted
Posted
20 minutes ago, 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.

FIFY

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77horn

77horn 216

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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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