America’s federal, state, and city governments are profligate and irresponsible with taxpayers’ money, over-spending themselves into declared and undeclared bankruptcy, and a national debt that now exceeds America’s GDP.
But if we, the American people, are better managers of our own finances, not only would more of us realize the financial black hole government is in, we would also demand more fiscal prudence from officialdom. Alas, Hadley Malcolm reports for USA Today, April 24, 2012, that “despite the recession, most Americans still know NOTHING about their finances,” especially young people. Here are the facts:
- Americans in their 20s hold an average debt of about $45,000, which includes everything from cars to credit cards to student loans to mortgages, according to a PNC financial independence survey released last month.
- At the same time, Americans 18-29 year old have a much higher jobless rate of 12.4%, well above the national rate of 8.2%.
- Financial literacy is especially needed for young Americans because they face an increasingly complex global economy that is credit-driven and puts more responsibility on individuals to plan for and manage their retirement accounts.
- But too many young Americans are financial illiterates. A biennial survey by Jumpstart Coalition for Personal Financial Literacy found that U.S. high school seniors scored an average of 57.3% on a 31-question financial literacy exam in 1997. Ten years later, in 2008, the average score was even worse, declining to 48.3%.
- Fewer than half of states in American make high school students take an economics class, and just 13 require a personal finance class, according to a 2011 survey by the Council for Economic Education. In those 13 states, though, the payoff is clear: Students who had taken such courses were more likely to go on to save money and pay off a credit card bill in full each month, and less likely to be compulsive buyers, max out credit cards and make late payments.
Bankrate.com has a test comprised of 12 of the questions from the 31-question financial literacy exam used by JumpStart. It’s quite challenging, much harder than the Pew political IQ quiz I posted last week.
To take the Financial I.Q. test, click here!
P.S. I correctly answered 11 questions, which gives me a score of 11/12.