American Students and Financial Literacy: A Losing Score
If you had to find the most financially literate teens in the world, where would you look for them? If your answer was anywhere in the United States, the following statistic may be hard to swallow: you’re more likely to find financially savvy teens in China, Belgium, Estonia, Australia, New Zealand, the Czech Republic, Poland, Latvia, France and Russia than in the U.S.
These are the results of a study by the Organization for Economic Cooperation and Development (OECD). American boys and girls scored a little below the OECD average as a whole, and below average in the percentage of students who achieved a baseline level of financial literacy.
So, what does this mean? How can we help our kids increase their financial knowledge? One correlation from the OECD assessment may shed some light on an answer:
U.S. students with a bank account (checking or savings) scored 37 percent higher on the OECD assessment. Unfortunately, the assessment found that only one in three U.S. students who are less well-off socioeconomically has a bank account.
This fact points to a solution that is very fixable: more U.S. kids need to have bank accounts, especially those lower on the socioeconomic ladder.
The debate about increasing financial literacy has ranged from requiring more math courses to requiring financial literacy classes in high school. However, nothing comes close to the actual real-life experience a teen would gain if they managed their own bank account with their own money in it.
This gives credence to the idea that the earlier you teach kids financial skills and give them financial responsibilities, the better they become at financial management for the rest of their lives.
What you can do
If you have kids, get them started with a savings account at Lincoln Savings Bank. You can use this to help them learn the basics: how to make a deposit, the importance of saving for a goal and how to recognize a want versus a need.
If you have a teen that is old enough to have a part-time job, they may be ready for the responsibility of a checking account in addition to a savings account. Having them experience what it’s like to manage money they earn while they still live at home is a great lesson, and they can always turn to you for help if they need it.
By increasing the number of American kids with bank accounts, especially those in less well-off households, we can give our kids the practical experience they need to be better money managers throughout their lives.
Come by your nearest Lincoln Savings Bank today to see how we can help! Member FDIC