Only 57% of Americans Are Considered Financially Literate
April 14, 2021
April is financial literacy month in the U.S., and if one research study is to be believed, we may want to spend more than just one month a year focusing on the concept. According to the S&P Global FinLit Survey, the first of its kind worldwide investigation into worldwide financial literacy, a little more than half, 57%, of Americans were able to demonstrate financial literacy.
The survey asked more than 150,000 randomly selected people from 140 different countries to respond to five multiple-choice questions. The questions were intended to be as broad as possible, required little math, and rather than focus on financial vehicles, tested the respondents on their understanding of concepts like diversification, interest, and inflation. For example, one question reads: “Suppose you put money in the bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank add more money to your account the second year than it did the first year, or will it add the same amount of money both years?” with the possible responses simply being “more,” “less,” “don’t know” and “refuse to answer.”
To pass, and be considered financially literate, a respondent would need to answer at least three of the five questions correctly. The worldwide average pass rate was just 33%.