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!

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

  1. There's nothing an individual can do to make getting a better paying, stable job easier; or making rent/cost of living more affordable, or healthcare just plain affordable, or change American culture, or get rid of capitalism, or make corporations less predatory, or make the extremely wealthy be less greedy. I'm voting for Bernie Sanders and any other truly progressive candidates in my local elections to help eventually even out the playing field.

  2. I've learned about money mostly myself, my husband, internet and youtube. My own family is a financial mess so I had to do it on my own. Once I even walked to the bank to talk about investing. Internet offers some good information if you know where to look!

  3. My financial education started 7 months with reading Rich dad Poor dad which I casually picked up
    Since then it has been a constant stream of binging youtube and reading other books

  4. 5:30 You used the wrong phrase of "negative feedback loop" when in this case it's a "positive feedback loop".
    I know that it doesn't matter too much since I understood what you meant to say, but others might not and it would possibly cause them to learn the wrong use of the phrase would allow them to repeat it incorrectly at different points in time, which would allow other people to possibly learn their wrong use of the phrase would be perpetuate the the incorrect use of the phrase "negative feedback loop" (i.e. creating a positive feedback loop for the wrong use of the phrase "negative feedback loop").

  5. I'm using my football scholarship to pay my way through a finance major in College. Any advise on starting a financial literacy program through my college to teach the surrounding community about finance?

  6. I was also terribly unprepared for life financially, being an American. Though I do remember there being one class offered at my high school that was about personal finance, it was just an optional course and no advice towards taking it. I'm unfortunately part of the population that has 100k in student debt, and a scary incident made me start looking up personal finance. Though youtube I came to find The Financial Diet and this channel, and I honestly feel so much more secure and informed now. I'm planning on using Khan Academy's econ sections to get a more in-depth look at these things. Thanks for this channel! I'll be signing up on Patreon!

  7. The fact that this channel has so such a small home-country-audience, reinforces their own title of their video.

  8. I’ve gotten a lot of inspiration from these blogs:
    Mr. money mustache, JLCollins, GoCurryCracker, and LivingStingy

  9. My parents taught me growing up. I'm grateful for it. Sure schools could teach it but blaming them is a pathetic excuse for not taking responsibility of your kids well being. These days if you look at media they depict family as something that holds you back, something that always crumbles. In reality families are at the heart of a nation's health and well being. If you don't have healthy families there cannot be a healthy civilization.

  10. It's like the system is designed to let the people who WANT to get financially educated win more at life.
    It's sad to see some of my friends who grew up with me in high school blow off most of their income. We grew up at the same place, learned the same thing, but diverged once we left for college. And now, even though I know they make more than me because they're in IT, I know I have more than them because I wanted to be financially literate and took the time to read/watch managing finances. 😩

  11. I like you guys a lot and have learned so much from you! You make these financial topics less daunting and break them down really well. I feel like you cover a lot of things that more people should be aware of. Thank you for doing what you do!

  12. I guess that's the reason why so many young people claim themselves as 'anti-capitalist' – it's easy to blame a system if you don't understand it.

  13. I watched my parents make poor money choices. Buying expencive cars. Buying boats and 4 wheelers when they didn’t have the money. My mom always griped that my dad was spending all the money before she could even pay bills. As I got older I saw them worry about retirement. They are both unable to retire and they are hitting 65 soon.

    Seeing that I make sure I have most all the money in my hand before I buy anything big. If I take a trip I save and budget or make a plan on how I will pay it off.
    I am working for a school district and saving 20% of my little checks twords retirement. As a lunch lady it’s not much but it’s better then nothing. More then my parents tucked away at their age. I have been wanting to save my tax refund and this year will finally be the year I can.
    1/3- my Roth
    1/3- emergency fund
    1/3- vacation. (What’s the point of saving if I can’t have some fun along the way)

  14. Talking about money was a no no at my house. I learned to be a saver because of DELAYED GRATIFICATION. When I asked my parents to buy me a toy, they said no… over and over again. I stopped asking for toys because I knew what the answer was. We weren't poor by any means… I never qualified for free lunches or financial need based scholarships. We had a home and it's paid off now. I didn't learn about credit cards until one of my last years of college.

  15. I think most parents do tell their children to be careful with money and to save. But when the children get to be teenagers, and they start acting irresponsibly, it gets difficult for parents to be strict with them.

  16. Darnn i would really like to become a patrion at the moment because you guy's truly deserve it, i look forward to join the other's very soon tho!

  17. How can a working person save more when they’re taxed more and more to supplement people who don’t work.

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