Is our children learning?
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YOUR MONEY
HIGH SCHOOLERS FAIL FINANCIAL LITERACY TEST
Everyone knows that the best investment for an 18-year time
horizon is... U.S. savings bonds. The next best place, of
course, is... a savings account.
Troubling statements, eh? If you think so, then you'll be even
more troubled by the results of a recent survey of high school
seniors. One question asked which investment would have the
highest growth over the next 18 years. More than 40% chose a
U.S. savings bond and 37.5% chose a savings account (the other
two choices -- stocks and a checking account -- garnered 18.7%
and 3.6%, respectively).
The survey was conducted by the Jump$tart Coalition for
Financial Literacy, a nonprofit group that receives direction
and sponsorship from government entities (such as the Federal
Reserve) and financial institutions (such as Visa and Merrill
Lynch). This past December, January, and February, 4,024 high
school seniors in 183 schools answered 31 questions about
personal finances. On average, the students answered 50.2% of
the questions correctly. Here's a sampling of the survey's other
findings:
- Under what circumstances, the survey asked, should you borrow
money to buy something? More than a third (37.7%) of
respondents chose "when the interest on the loan is greater
than the interest you get on your savings."
- When asked to complete the sentence, "Retirement income paid
by a company is called...," 33.3% answered "Social Security."
Slightly more respondents, 35.1%, chose the correct answer
("pension").
- More than 20% of participants thought there was a 5.5%
national sales tax, and 17% thought the sales tax is deducted
from paychecks.
So what will it take to uncloud the minds of America's future?
As they say, clarity begins at home. If you have kids, teach
them about money, early and often. (Here are 10 ideas.) Also,
encourage your kids to manage their own dough. Students who
don't have a savings or checking account scored lower on the
financial literacy test.
fool.com
Even if you don't have kids, prod your local schools to
incorporate personal finance education into the curriculum. As
it is, less than 10 states require it. (What is your state doing
about it?) According to Dara Duguay, executive director of
Jump$tart, federal funds exist for this type of education,
thanks to recent legislation. Schools just need to take
advantage of it.
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