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Financial Literacy Across the World

Posted: April 14, 2016 in Advice & Tips, Education, Everyone, Ideas & Info for:, Topics, Your Money

The United States is considered a global leader on numerous fronts, but when it comes to teenage financial literacy, we’re simply middle of the pack.

In fact, on a 2014 international financial literacy test, the mean score for American 15-year-old test takers was roughly 490. For context, that places us between Latvia on the upper end and Russia on the lower end. Shanghai teens performed the best with a mean score around 600.

So why doesn’t America’s greatness translate to teenage financial literacy? Well, the answer is simple: we aren’t teaching enough teens the basics.

According to the Council for Economic Education, the number of states that require high school students to take a course in personal finance has remained unchanged at 17 since 2014. To put it another way, less than half the American states are preparing their teens for real world money management.

Meanwhile, other countries across the globe are implementing mandates to require financial literacy coursework be taught in schools. The United Kingdom joined Australia and Singapore in 2014 as countries that include personal finance classes in official curriculum, and other countries like Canada and New Zealand are poised to make similar requirements in the near future.

Among the states that have mandated personal finance education courses, the students exhibit meaningful improvements. Three years following the course implementation in Georgia, Idaho and Texas, credit scores increased by 2 percent, 3 percent and 5 percent respectively.

Additionally, students who have received personal finance education are more likely to display financially responsibly behaviors like saving, budgeting and investing. The Council for Economic Education reports 93 percent of those who have taken a class save money vs. 84 percent of those who have not; 60 percent of those who have taken a class have a budget vs. 46 percent of those who have not; 32 percent of those who have taken a class have invested money vs. 17 percent of those who have not.

But perhaps an even more significant obstacle for teens to hurdle in the quest to obtain lifelong financial skills is that most parents don’t feel equipped to pass on sound financial knowledge, according to PBS.

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