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Financial literacy a big problem for many Americans

| Jul 14, 2016 | Personal Bankruptcy |

A recent study found some troubling news when it comes to how much many Americans understand about their finances. The study found that when faced with a five question test of basic questions about finance, two-thirds of people failed to get at least four answers correct, according to Fortune. While it may seem logical to assume that many people would have learned some harsh lessons about money from the Great Recession, it does not appear to be true considering the number of people who can successfully pass the five question test has actually fallen 5 percent since 2009.

Some areas in particular seem to be troublesome for many people. Only 28 percent of respondents knew that bond prices rise as interest rates fall. In addition, almost two-thirds of people were unable to figure out how to calculate interest payments and less than 50 percent demonstrated basic knowledge about financial risk.

In order to improve these numbers, it will be important to teach young people about the basics of finance and economics. Since very few children learn about such things at home, it often falls to schools to fill in the gaps. However, according to CNBC, there is a lot of room for improvement when it comes to teaching these subjects.

Only 16 states require standardized testing on economics and only 17 states require personal finance to be taught in high school. Progress is being made, however. 45 states, including North Carolina, have personal finance included in their K-12 curriculum, and all 50 states include economics. Statistics have shown that in states where teaching finance is required, young adults had higher credit scores.