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

[Nivek 16916]

Is there a break down of the answers? If I was given that quiz I would have told the person to fuck off. Would that count as refuse to answer?

[Nice Guy Eddie 13507]

This survey is interesting but they have no idea how other generations tested at the same point in their life. 

it also gives little insight into which or how many answers were right/wrong.

i also wouldn’t pick those questions as qualifiers as financially literate. Most younger people are told to invest in their 401k to set and forget it. They don’t pick individual stocks. 

[RollLeft 5040]

4 hours ago, workswithseed said:

Who still keeps up with the Kardashians?

I think your statement proves my point, lulz.  You tell us who is in these days because i certainly am out of the loop of who the fuck is out?  

[Nivek 16916]

7 hours ago, 77horn said:

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.

They also have apps like Mint that helped to show how the money is allocated on a percentage basis and in more detail.  

[52-80 19142]

16% of millenials are numerically challenged?

Damn, that's like 1 out of 3

 

[TwiceHorn 31435]

10 hours ago, Captainant said:

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

Oh, they had plenty of literacy trying to get richer and buy more shit.  Just didn't include education for their kids.

Not a matter of literacy or ignorance.  Pure dee selfishness.

Edited March 1, 2020 by TwiceHorn

[ImissWallyPryor 9046]

Boomer here. I have 4 Millenial kids born in '93 to '99 (some would say Gen Z for the latter ones). Btw, most of my kids' friends' parents are Gen X, not Baby Boomers. I'd bet that about half of the Millenials have Gen X parents, as do almost all of the Gen Zs. 

My oldest son went to business school, then MBA, and he is on a fiscally sound path.  My second (daughter) can't even keep from spending her rent money, but has the sense to have me hold it for her until the 1st...baby steps, I know. The last (daughter) has the same tendencies, just not as bad.  The next-to-last took some coaxing to move her money out of her bank savings account, and into something with a decent return.  She chose a bond fund and a stock fund (double lol).  She's graduating this spring (science major, no business or economics classes) with almost $25,000 to her name. I offered to cover any losses she may incur in the funds as an incentive to get her to act, but both funds are solidly in the black. She's now obsessed with saving and investing, and she can't stand withdrawing money from her accounts.

I wouldn't have believed anyone who would have told me how differently my kids would have turned out when it comes to finances.

I should give them this quiz.

Edited March 1, 2020 by ImissWallyPryor

[TwiceHorn 31435]

On 2/28/2020 at 6:03 PM, 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 cannot for the life of me remember what classes I had it in.  As a junior in ME, we had to take Engineering Economic Analysis, which was self-paced for most (indicating that it was understood that this would be easy for most students).  It had PV/FV cash flow rate-of-return all that and I was already familiar with most of it as were most of my peers.  

Interest and compound interest I seem to remember from, as you say, algebra, but time-value of money I don't remember at all, but must have come at the same time.

[Samson's Wig 3190]

On 2/28/2020 at 5:29 PM, TwiceHorn said:

I don't remember where I learned about the time value of money.

I picked up investments from my parents, intially.

Tax law as a 2L at the absolute latest, I would imagine.

[Dnaguy 11916]

On 2/28/2020 at 11:24 AM, clapclapclap said:

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.

  Reveal hidden contents

(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."

 

[Dnaguy 11916]

On 2/29/2020 at 6:11 PM, 52-80 said:

16% of millenials are numerically challenged?

Damn, that's like 1 out of 3

 

 

 

 

 

 

[TwiceHorn 31435]

15 minutes ago, Samson's Wig said:

Tax law as a 2L at the absolute latest, I would imagine.

Fuuuuck.  Federal Taxation under Mark Gergen was probably the most worthless class I ever took at any level of schooling.  I sure as fuck didn't learn anything useful about finance or economics in that class.

[WBT 20561]

3 hours ago, TwiceHorn said:

Interest and compound interest I seem to remember from, as you say, algebra, but time-value of money I don't remember at all, but must have come at the same time.

same thing really

[ImissWallyPryor 9046]

1 hour ago, TwiceHorn said:

Fuuuuck.  Federal Taxation under Mark Gergen was probably the most worthless class I ever took at any level of schooling.  I sure as fuck didn't learn anything useful about finance or economics in that class.

Different subject entirely, but I took a PLM-required class my last year at UT that was taught by a South African professor. He spent the entire semester trying to convince us that worldwide oil reserves were on the same unrecoverable downward path as South African coal reserves. He proved it daily with graphs because he was a genius. 

Edited March 3, 2020 by ImissWallyPryor

[Chopper 17230]

I don't know if it's reflected in the survey results, but just to put some context into this, millennials as a group have significantly less money than previous generations. "Millennials will have to increase their wealth sevenfold in the next few years to have as much as boomers did at age 35," per Marketwatch.
 

Quote

 

As a whole, boomers have fared better financially than Gen Xers (born between 1965 and 1980) and millennials (born between 1981 and 1996) throughout every stage of their lives. Boomers currently boast more than half (57%) of the nation’s wealth, while Gen X owns just 16%, and millennials 3%.

Adults under 40 have been accumulating less and less wealth over the past 30 years, plummeting from owning 13% of the wealth in 1989 to less than 7% today.

 

Edited March 3, 2020 by Chopper

[Beau Vine 54204]

Hard to generate household wealth when your top investment is avocado toast.

[tbone_ 14106]

I think it’s bottle service at the club that’s killing them.

[TwiceHorn 31435]

6 hours ago, WBT said:

same thing really

True enough, but they seem to be kind of introduced at different times.

Here's simple interest  . . .  compound interest . . . .  present value  . . .  cash flows and so on.  At least that's the way I remember it, but as established, prior to ME338 I have no clear recollection of where I picked it up.

 

Edited March 4, 2020 by TwiceHorn

[Sgt Hulk 13712]

On 2/28/2020 at 9:24 AM, clapclapclap said:

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.

  Reveal hidden contents

(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."

 

I for one am shocked  shocked i tell you,  then i see all the crap posted on FB this time of year/cycle and im not shocked

[Texas_Rocks 346]

You guys jest, but millennials are going to save the world once they consolidate all of the allowance money that they’ve been saving.

[Larry T. Spider 1746]

Financial literacy/personal finance begins being taught in Texas in the 3rd grade. It’s relatively new so millennials and non-Texans probably didn’t get it. It will be interesting to see if it makes a difference in 10 years.  They cover debt, credit, interest, responsible uses of money, etc. This was on staar last year:

Ms Patterson works for a company. Which factor would most likely affect the amount of money she gets paid by the company?

A. The amount of money Ms Patterson has to pay in bills.

B. The size of Ms Patterson’s family.

C. The amount of money Ms Patterson saves every month.

D. The work experience Ms Patterson has.

E. Her company calculates a mans salary and simply pays her 80 cents on the dollar.

Ok, I added the last one but it’s interesting what they ask 7 and 8 year olds.

[52-80 19142]

that question isnt exactly germane

[Asithappens 974]

The single biggest thing to learn about "finance" is to invest in a broad-based index fund. 

Vanguard Admiral, for example. 

Put money in at regular intervals and forget about it. 

You can't time the market. Your dumb ass neighbor/friend doesn't have any good stock tips. 

[Asithappens 974]

28 minutes ago, Larry T. Spider said:

Financial literacy/personal finance begins being taught in Texas in the 3rd grade. It’s relatively new so millennials and non-Texans probably didn’t get it. It will be interesting to see if it makes a difference in 10 years.  They cover debt, credit, interest, responsible uses of money, etc. This was on staar last year:

Ms Patterson works for a company. Which factor would most likely affect the amount of money she gets paid by the company?

A. The amount of money Ms Patterson has to pay in bills.

B. The size of Ms Patterson’s family.

C. The amount of money Ms Patterson saves every month.

D. The work experience Ms Patterson has.

E. Her company calculates a mans salary and simply pays her 80 cents on the dollar.

Ok, I added the last one but it’s interesting what they ask 7 and 8 year olds.

Well, the most correct answer is probably E. 

 

[Hawndoh 2386]

I teach 7th grade math and we do a whole unit on financial literacy including compound interest, how credit cards work, net worth statements, etc. 

Financial literacy was added to most math grades several years ago.

[ImissWallyPryor 9046]

13 hours ago, Asithappens said:

Well, the most correct answer is probably E. 

 

I know you’re joking. 

[Paco 1934]

How big are Ms Patterson's tits?

[HRSchenker 2268]

On 3/4/2020 at 11:25 AM, Larry T. Spider said:

Financial literacy/personal finance begins being taught in Texas in the 3rd grade. It’s relatively new so millennials and non-Texans probably didn’t get it. It will be interesting to see if it makes a difference in 10 years.  They cover debt, credit, interest, responsible uses of money, etc. This was on staar last year:

Ms Patterson works for a company. Which factor would most likely affect the amount of money she gets paid by the company?

A. The amount of money Ms Patterson has to pay in bills.

B. The size of Ms Patterson’s family.

C. The amount of money Ms Patterson saves every month.

D. The work experience Ms Patterson has.

E. Her company calculates a mans salary and simply pays her 80 cents on the dollar.

Ok, I added the last one but it’s interesting what they ask 7 and 8 year olds.

How can you honestly answer this question without pics of Ms Patterson?

[clapclapclap 9000]

#MillionMediaMarch

#MarchMathness

 

[NeverMarryAStripper 21870]

And that's your average American voter.

[BabaYaga 15286]

Beat me to it.  Sweet baby Jesus this is sad.  

Obligatory...

[TwiceHorn 31435]

Sweet baby Jesus, indeed.

It is a very incredible way of putting it.  Especially if you are credulous.  I am incredulous.

Edited March 6, 2020 by TwiceHorn

[RDCanecutter 26377]

On 3/3/2020 at 10:05 AM, TwiceHorn said:

I cannot for the life of me remember what classes I had it in.  As a junior in ME, we had to take Engineering Economic Analysis, which was self-paced for most (indicating that it was understood that this would be easy for most students).  It had PV/FV cash flow rate-of-return all that and I was already familiar with most of it as were most of my peers.  

Interest and compound interest I seem to remember from, as you say, algebra, but time-value of money I don't remember at all, but must have come at the same time.

We had this financial course as Art Majors that I call "Survive Four Years of Being an Art Major." If you could puzzle out how to secure 4 years of funds, be it traditional (Live Off MommyDaddy's Broken Hearts) or radical (Work Really Fast On Every Art Job The Art Secretary Hears About) you were good to go the rest of your life.