Why Americans Are Failing the Grade at Financial Literacy

Why Americans Are Failing the Grade at Financial Literacy

Hey, you Two Cents viewers! Here with a special announcement: Make sure
you make it to the end of the video where we get to share some exciting news! You’re pregnant again? Ha ha ha ha… The United States has the world’s largest
economy and our workers have some of the highest salaries in the world. But if you think that most Americans have
piles of money, great credit, and low amounts of debt, you’d be wrong! Since you’re following our channel, it’s
probably obvious to you that our financial literacy is at crisis levels, but have you
ever stopped to wonder what led us to this point? And more importantly…what can be done to
change it? In 2015, the S&P Global Financial Literacy
Survey asked 4 simple financial questions to respondents all over the world, and the
results landed the U.S. in 14th place for financial know-how. And it shows. Americans are failing the grade by nearly
every metric. Nearly 60% of U.S. households don’t keep
a budget. Two thirds would be unable to scrounge up
$1,000 for an emergency and 35% have a debt currently in collections. The average college student carries $30,000
in student loans, and floats a credit card balance of around $8,000. The median retirement savings for Americans
age 55-64 is around $100,000 – an amount that would translate to just $310/mo of income
in retirement. And it’s especially scary for our generation
— even though 69% of millennials rate their own financial knowledge highly, only 24% are
able to demonstrate “basic financial literacy”. One of the biggest factors is the lack of
any formal financial lessons in schools. Even though the Council for Economic Education
found that kids who receive financial education are more likely to save, more likely to pay
off their credit cards each month, and less likely to become compulsive buyers, only a
third of states currently offer it! And of those that do, most of them incorporate
the subject inside of another course of study, like economics, math, or social studies. Only five states require a semester-long course
focused on personal finance. But the problems don’t stop there. The minute high-schoolers graduate, they’ve
got a target on their backs and the financial industry is lying in wait. Credit card companies are notorious for luring
kids into high-interest credit cards with offers of T-shirts or a free pizza – despite
the fact that most students have little to no income and hardly any real-world financial
experience. Unfortunately, that trend of financial institutions
targeting the non-savvy doesn’t let up as you get older. Current rules in the US allow brokers (under
the guise of “financial advisors”) to put their own financial interests ahead of
consumers when selling a financial product. For real! To be fair, the financial industry does engage
in some education. But consider this…In 2013, the Consumer
Financial Protection Bureau reported that while $670 million dollars was spent by the
industry on consumer education, $17 billion dollars was spent on marketing their products. That’s a ratio of 25 to 1. Chump change. Make no mistake, the cumulative results of
people not saving enough or getting into financial trouble doesn’t just fall on them and their
families, but on society as a whole! So what can we do to help promote change? Consistently scoring at the top of such surveys
are the Scandinavian countries like Denmark, Norway and Sweden. There are a lot of reasons for this. In Sweden’s case, for instance, there is
a long cultural tradition of saving. No major disasters in the financial markets
to undermine trust in the system. And the presence of the Financial Supervisory
Authority, a strong government agency designed to regulate the entire financial services
industry. But probably most important is that kids are
taught about the basics of personal finances starting in the first grade and continuing
all the way up to high school. Changes have to be made to education here
in America if we’re to stand a chance of improving things. And you don’t have to be a parent to advocate
for a child’s right to quality financial education. You can look at this map to see what standards
for financial literacy your state currently mandates. You can also reach out to your state representative
to let them know what you’d like to see offered to future generations. Unfortunately, the primary reason cited for
not including this kind of education in schools is that it’s the parents job. But we all know that’s not really happening. Nearly half of Americans don’t talk with
their children about money at all. And it’s not because they don’t think
they should! It’s because most simply don’t know what
to say. If you’re a parent, or hope to be one someday,
you do not have to be an expert to teach kids about money. Simply getting them their own bank account
seems to have positive results with 15-year-olds scoring 40 points higher in financial literacy
than those without one. Kids also learn best by doing, so next time
you sit down to pay your bills online, call your kid over and coach them through how to
do it themselves! For bonus points, check out our previous video
about how to talk to kids about money! This is so important because if finances aren’t
talked about much growing up, we tend to continue that approach of avoidance even when we leave
home. We just stumble along assuming everyone knows
more than we do, afraid to call attention to our ignorance. And it’s that unspoken taboo around the
topic of money that allows this negative feedback loop to continue. Thankfully, it’s never been easier to take
your financial education into your own hands! The last decade has seen a tsunami of blogs,
podcasts, programs, books and courses aimed at filling in the adult education gap when
it comes to finance. And there are tons of amazing FREE or low-cost
resources out there. Hundreds of libraries all over the country
host “Money Smart Week’s where they cover topics like retirement, budgeting, and credit
— without any incentive to make you a paying customer! There’s also the National Endowment of Financial
Education’s website smartaboutmoney.org with lots of free courses. You can even ask your employer to bring in
a financial educator! After all, a better educated workforce is
in everyone’s interests. As a dedicated watcher of two cents, we hope
you continue to broaden your own financial education. And don’t keep the lessons you’re learning
all to yourself! We expect you to share your newly earned money
smarts with those you care about. Changing the face of financial literacy here
in the states and around the world is not just our job, it’s yours too! And that’s our two cents! The vast majority of financial education out there is funded by big corporations. We, and our co-creators, chose to partner with PBS specifically because we believe financial education should be free from “for-profit” hidden agendas. And over the last year it’s been made abundantly clear you guys want that too! We’ve gained hundreds of thousands of subscribers, scooped up a bunch of awards and are blessed with a community of enthusiastic people willing to share their stories and experiences. But did you know that each episode takes between 40 and 50 hours of work to make? Yea, these amazing visuals and carefully written scripts are being made by a team of full-time professionals so I think you can tell where we’re going here…. We’re starting a Patreon! Now, before you groan we of all people know how important your hard earned dollars are and we have given our perks a lot of thought to make it worth your while. That’s right! We’re going to be inviting you backstage for an intimate look behind the scenes, a new space to chat together as a community and even the chance to digitally hang out with us on a monthly basis. Also as a special limited time offer, we’ll be providing everyone who contributes, in the next two weeks, a special budget template; personally designed by us to help you create your ideal budget from top to bottom. We hope that this show has provided you value and you’ll consider joining us in our mission to change the world’s relationship to their money through education. It’s a big vision and we can’t do it without you. Where did you learn about money? From your school? Your parents? YouTube? Let us know in the comments!

100 thoughts on “Why Americans Are Failing the Grade at Financial Literacy

  1. I didn't. I was living off my parents and being a spendthrift for far too long in and out of college.

    I learned about money when I was broke and cut off and pawned Jewelry to pay the internet bill.

    I had a lot of guilt surrounding money, still do.

    Not sure if you have a video like this already, but I the link between trauma/emotional health and your relationship to money.

    Think it'd be helpful.

  2. The only reason how I learned about money was from how bad my parents managed it which made me want to learn and not follow the same mistakes as they did

  3. I am so angry with the US educational system. It taught us all about dinosaurs, US history, science, and all the other core useless for the real world courses, except sex education. However, financial education is just as important if not more. Financial education should be taught like in Sweden and Norway since 1st grade in the US. Because US people are dumb with money.

  4. The best thing for all US educational system since first grade is make it mandatory that all schools students watch Two Cents daily together in class.

  5. I learned about money from Two Cents. My parents, and from the educational institution where i graduated never taught me about the essentials for saving and how i could benefit from it in the long run, so i thank you a lot for this channel for teaching financial essentials not only to me but to the whole world as well.

  6. I just watched this right after the cost of being poor video. The problem we have in the US is that the corporations always have the upper hand. We don't have financial education because they don't want us to, it's easier to victimize someone if they don't have the knowledge to avoid the traps you set for them. My mom was a drepression baby, so her education for me was to save, and pay my bills on time. I was taught nothing about stocks, bonds, or other investments. This became a problem later for me. We should have unbiased finical education in our schools.

  7. Fiduciary Duty: A legal obligation of one party to act in the best interest of another. The obligated party is typically a fiduciary, that is, someone entrusted with the care of money or property. Also called fiduciary obligation.

    Read more: http://www.businessdictionary.com/definition/fiduciary-duty.html

    Message me if you want to have a further discussion. I am a financial representative and Id love to answer questions or if you just want some more education.

  8. in my high school, we had to do a semester's worth of financial literacy in my freshman year but it didn't do anything. we should have a law saying that we should have financial literacy as a subject for all school levels!

  9. Definitely very important stuff to teach in school! In High School there was an extracurricular class called DECA that really helped with this. And a financial literacy class most seniors had to take for a math class. I took Calculus instead. And instead learned about finance by getting a job at a credit union!

  10. After watching this video, I decided to take a financial literacy quiz online, I got a 70%, 9 wrong, the average score was a 67.74% and around 58% of people passed. I technically passed but it is kinda sad how many I got wrong I feel like.

  11. Me and my 5 high-interest credit cards feel personally attacked.

    Honestly I've learned a lot from Reddit and YouTube, but I wish I learned at a younger age.

  12. Thank God my mom taught me about money. I love to discuss money and my friends who have no money are uncomfortable and stressed by it. I wouldn't have gone to college if I didn't have 30K ready for it. The last third of loan I took out I paid off in like 9 months. All people when I made the last payment of like 3500 were congratulatory and I was like thanks 😊… it must be a rare occurrence. No thanks to debt I use debt to make money but refuse to carry a balance because I have actual savings and I'm not chunking all my money away where I couldn't access it since I understand the markets and I can get a 10% apr return by following trends and limiting fees to less than 1% with the oldest brokerage services.

  13. My sister and I got most of our financial knowledge from our parents. We were negotiating Christmas gifts, allowance and even loans by the time we were 8. We wanted a new video game/ toy? Were we willing to pay off the loan of our allowance for the next 3 months? My sister never liked mathematics, but when she understood that if she loaned money she could get money back on interest she was very interested and that if she took to long to pay off borrowed money she was going to have to pay more than what she had originally borrowed? that was a no thank you. Teaching your kids about finance doesn't have to be hypothetical or boring, kids understand the value of money, the value of cost and work since a very early age and as they grow you can also accommodate to the tasks to teach them about budgeting( giving them their allowance once a month instead of every week, so they need to budget their expenses)

  14. Yyaayy! You featured Nicole from Frugal Chic Life! I'm subscribing! Great content and showing love to others! I'm so glad I found you.

  15. This really needs to be MANDATORY in schools.

    + My mom is the real MVP: when I asked about budgeting and income, she opened her checkbook, showed me her check stubs, and showed me her bills
    Props to you, mom!

  16. Why do you think I am here watching 2cent. Getting me my financial education ! A really good one 🙈😆👍

  17. Well, if you think #14 in the world for a country like the US is a bad score maybe your common sense is failing.

  18. As a recent high school graduate, it really refreshes me to see how inspiring you guys are and it shows through the quality of your videos. I’m a definitely becoming a patron because of the work you do. I’ve learned so much financially from you guys and I can’t wait to see more. Go Two Cents!🙏🙌

  19. Our youth don't need a high school course on personal finance and financial literacy. They can learn it for free on YouTube by watching Graham Stefan's channel.
    They don't need to go to college to learn it either. They can get a free financial education on the internet. They will learn more valuable information than I learned as an economics major in college. They won't have to pay anything for it. Plus they won't have to listen to any of the other nonsense the teachers will try to shove down their throat in college.

  20. I can answer that question really easy for me. Well in my school when the school has the oh so bright idea to cram two different AP classes in one school year, I'm going to care less in what my AP macroeconomics in my second semester showed us bc the teacher did jack AND HE GAVE US IMPOSSIBLE WORK TO DO WITHOUT EXPLAINING THEN FREAKING GIVING US EVERFI TO JUST TEACH US LIKE FORGET YOU MR. A FOR GIVING US A PACKET DUE THE NEXT DAY EVERYDAY THAT ONE WEEK WHEN I WAS SUPPOSED TO FINISHED MY AP ART! AHHHH!

    in simple terms, just bad planning

  21. I'd rather schools teach financial literacy then sex ed. Ultimately, a child's education is the parents responsibility. But, I don't see why schools would teach sex ed but not financial literacy.

  22. Good stuff . . .my initial money lessons (of what NOT to do) came from watching my parents growing up, but my initial lessons on what to do came from an Andrew Tobias book I read during my first deployment

  23. because most Americans are lazy ignorant idiots…democrats More accurately…
    Just look at myworldisgetting dumber on youtube…

    And look at the huge national debt look at minimum wage look at all that shit the government does…. People learn from them and imitate the democrats… Unfortunately…

  24. I had to take an econ course with a personal finance unit, but it was pretty useless. I remember doing a budgeting project where we drew random jobs/salaries and had to budget out 6 months. The entire project was at most a month long though, and it's really not enough time for the lesson to sink in. We also did fake investing in stocks, although that was useless less because it was structured poorly and more because it was 2008 or 2009 and it was based on real stock market performance – we all started with 100k and the winning team only lost 4,000. I've learned a ton in the past year thanks to having a regular job/income and living with my partner who is more financially literate than me

  25. I learned from the internet. After I told my mom, she actually already knew the steps. I'm like then why didn't you tell me? Why don't we have a budget and you let us eat out? And why did you buy a new car on a 25k salary? Learning it is useless if you don't live it.

  26. At my school, Personal Finance was seen as the "blowoff" for the "dumb kids" who didn't want to take Calc or Stats, and the majority of the advanced kids didn't take it as a result. Even the counsellor scoffed and said "are you sure?" when I signed up. While our personal finance class wasn't perfect, it was extremely useful for me and was probably one of the most useful classes at my school. (My school also entirely cut out home ec so they could expand the teacher's lounge and myself and so many of my friends were really sad when we found out we couldn't take it)

  27. In the internet age there is little excuse for financial illiteracy. If you dont know something you can find it in minutes on a pocket-sized device nearly all of us own

  28. I am 45 and in community college for business management.
    In my first semester as a free elective, I took personal money management.
    I did not realize just how enough with finances I was until I took this course.

    My wife read my textbook and we took the tools in the textbook to strengthen our financial status.

    Now this is just my opinion.
    But I think that personal finance should be a high school course. Because it just one semester of learning about my finances help me to improve everything drastically. And we do this for the high school kids.
    Perhaps there won't be so much debt among young people and our country is a whole could become more financially stable.

  29. I learned from two great resources initially it was my mother who taught me the basics after was my high school teacher (not actually supposed to teach it) taught me real estate investing and how to play with a Roth 401k investment after was the pleasure of working in a bank and learning from my customers personal finance.

  30. You are right about financial literary however nobody asked me anything. I do operate on a budget, I do have money for emergencies, and I dont have any debt in collections.

  31. I feel like I'm from a different planet. Back in the 1950's my parents, uncles & aunts [all grew up in the Great Depression] forced us kids to track our expenses as kids and toddlers. And then every 2 weeks when our father's got paid, we sat down around the dining room tables with check book open to discuss distribution of money and budgeting. Then in school we kids bought these red stamps that went into a book that went to buy US gov't bonds. We were also given a white book that we'd take to a bank so that the change could be placed into our savings acct. For crying out I remember being forced to memorize the compound interest formula in 1st grade. In addition to this, all of our fathers worked in the mills and factories, and about every 2 years, they were on strike. So all of the adults in my family created a 2nd job for income [my Dad fixed up old run down shakes and then flipped them]. Then during hunting season, we all went hunting for wild game and us kids were also taught to forge for wild food. By the mid-60's when we were teenagers, most of us stopped this. But when I got older, I went back to these old habits like several of my other cousins.

  32. You lost me at "a child's RIGHT to quality financial education". It's extremely important but not a right.

  33. Great video. Yes I agree with Chris' comment below. It is insane that this type of information is not taught in schools.

  34. Teaching my kids about finance is MY job.

    I took those kinds of classes in high school and college. They taught formulas and abstract concepts. Sure, those things were valuable, but they didn't teach me life lessons. The life lessons came from my parents and family.

  35. You are wrong. There is no proper family unit to educate the young in USA which has led to current results.
    Americans, two generations ago have had high savings culture.
    Come to any South East Asia, India or East Asia : middle class are taught to get an undergraduate degree and a home first .Normally , at least 30% of their income are saved or invested every month.
    Moreover, they do not abandon their parents like you.

  36. Patreon censors and actively fights against free speech – sorry – I cancelled my account last year
    you might consider an alternative

  37. Reading below doesn't make me feel bad.

    My financial education was watching the lack of a major budget at home and my grandparents telling me to save while discouraging me to work. I still hear my grandfather telling me when I wanted to save my pennies, nickels, and dimes as well as when I went to hunt for my first job telling me it was hard and giving me the impression it wasn't worth it.

  38. My moms been living paycheck to paycheck for most of my life, so ive been looking for other ways to understand money and build my finacial literacy. I mainly go on youtube and watch the finacial diet. But i also ask adults that i know who understand money and it really helps to have peoplw there that you can trust to talk about finances and not feel judged

  39. I learned via the school of hard knocks. Looking to continue financial literacy education formally this fall; CFP at a conventional institution. Any recommendations?

  40. Hello 2 cents! I’m a huge fan. I was wondering if you guys could do a video on what to consider when thinking about relocating and working in a different city/country….

  41. The reason for American financial illiteracy are these 2 cartoon monkeys. We as Americans are heading towards a collective retirement and financial cliff-edge. These 2 are talking to the dogs not even 5 year olds. This video tells it all.

  42. Just wow the best power couple on YouTube telling it like it is!! Ps please post pics with the baby. 🙏🙏🙏

  43. I live in Alabama. My financial literacy class lasted one day and my teacher told us to pick a city where we wanted to live, see how much money the average person makes a year and build a budget off of that. She also told us to get a credit card.

  44. Thank you Two Cents, I learned about money while taking a Dave Ramsey class. I love your Youtube channel, thank you for all your team does.

  45. There is something that's very hard about trying to share this information with people you see making all the wrong decisions. It turns out that most people isn't really interested unless you are offering a 'get rich quick' scheme, no wonder those guys are so successful. Any advice on bringing this info to people I care about? Most of them don't speak English so it's hard to just share the video.

  46. I started by listening (and watching) Dave Ramsey, but I found that there were parts of his program that did not make sense to me. Later, I started watching the Financial Diet and One Big Happy Life, and eventually this show. They tend to make more sense to me because they talk about the importance of investing when you're young. Had I done that instead of trying to (admittedly halfheartedly) follow the Baby Steps, I would have a much bigger nest egg than I have now and still be paying extra on my debts.

  47. My parents grew up dirt poor so they taught me a lot. They always… ALWAYS talked about money and it was infuriating sometimes.   I think the best thing I did was play city building video games where I had to balance spending and earning in order to expand my influence over ancient Rome and Egypt. But also real time strategy games too like StarCraft, Warcraft, Empire Earth, etc.

  48. I learned about personal finances through free workshops and classes at my church. The introduction helped me and I'm very grateful.

  49. The problem is that Banks and the financial industry lobby the government for them NOT to teach people about Finance.

  50. The teachers themselves don't know about financial education, so don't take financial advice from broke people.

  51. I took an absolutely useless AP calculus class that I barely passed and don’t remember anything from instead of personal finance because the counselor would categorize that class as something for dumb kids. My little brother went through the same thing I made sure to guide him because my parents and older brothers are terrible with their finances.
    I learned it all from YouTube so you guys should get paid for your hard work

  52. It's almost like there's an incentive to make sure unsuspecting 18 year-olds go out into the world with no financial knowledge…hmm…

  53. I took financial literacy as an elective and economics last year in high school so I don't see how the education system is that bad. We had plenty of options to take financial stuff but one thing we have to remember as Americans is that frivolous spending on a whim is what makes the economy go round. When ever a recession happens and spending drops then businesses lay people off which is bad for the economy. So while it may not be wise to spend 50% of your paycheck on a house, then lease a new car every 3 years and buy everything else on installments, this poor planing also makes the economy better (except when the debt bubbles catch up to people like in 2008)

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  55. Funny enough I did take economics in high school which gave me a very basic understanding. Most of my knowledge as a young adult came from watching my mother epic fail in all her financial decisions and doing the opposite of what she did. Negative feedback loop annihilated 😂😂

  56. I hold the time I spent working at a bank very dearly. It opened my eyes to a lot of the shady practices that these institutions use to indebt people so they can keep ahold of them. Because of that, I consider myself a financially responsible person and everybody around me agrees with me (no debt, no cc no student loans) 🙂

  57. We had half of our 10th grade year dedicated to “health” and the other half to “personal finance”. For personal finance my teacher only showed us Dave Ramsey DVDs… I am from Missouri….

    It got me to want to save up but that’s about it.

  58. As a nowegian student i can tell you that I got little to no education on finances in elementary school, and very little in middle school, probably the reason holmlia is such a shithole

  59. 🤣😂🤣😂so it is parents responsibility to teach financials to their children, but parents can't guide their children it the rest of their education and correct them. Parents can't say anything to avoid children's misguidance in life specially with the gender identity punched by the liberal government.

  60. I was required to take a financial literacy class to graduate in Oklahoma, which is surprising when you consider that we have the 49th worst public education system in the United States. 😬

  61. Scientifically dubious. Dramatic presentation. Little empirical support. I bet the production team doesn't know that the link between financial education and financial literacy has been scientifically challenged. There's very limited evidence that financial education actually yields long-term gains in financial literacy. Yet, flashy videos like this continue to misinform and mislead the public.

  62. Sweden, right. Like Denmark interest rate gone negative. Despite a financially literate population is no match for fuckwit Keynesian central bankers.

  63. Im living at home so I basically dont spend any money I save and invest between 80 to 90 percent of my income but if I had to pay rent bills food I wouldn't have shit left

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