Study Reveals Which Americans Are Most Financially Literate
Inside Subprime: May 15, 2019
By Grace Austin
A new study is revealing which Americans know the most about money. While most of the answers are not surprising, following traditional ideas about financial literacy along class, gender and education lines, experts say it proves the need for greater financial education.
Americans continue to amass more and more credit card debt each year, and studies show that many do not have enough to cover an unplanned financial emergency. Now, financial experts are looking at how people are saving and spending their money, and what can be done to make them more financially literate.
The study used metrics like public high school graduation rates; the number of adults with “rainy day” savings; the number of unbanked households in the state; spending habits; average credit scores; and the number of people using financial services from non-bank lenders, such as payday loans.
Overall, the top 10 states for financial literacy seemed to be spread across the country. Virginia, Utah, New Hampshire, New Jersey and Minnesota, respectively, ranked as the top 5 states. The bottom 5 states for money know-how? Louisiana, Alaska, Mississippi, Delaware, and New Mexico, in ascending order.
The study’s analysis also revealed a strong correlation between state education ranking and a financial literacy score, with a few outliers. Those included Alaska, which was 14th overall in financial literacy but 47th in state education rankings. On the other end was Delaware, with a score of 48th in financial literacy and 11th in state education.
The same correlation was true of credit score ranking and financial literacy, with higher credit scores generally rising with financial literacy scores in each state, excluding a few outliers.
The survey also revealed gender and class differences. The study found that men ranked somewhat higher than women in financial literacy, and that a higher financial literacy score was consistent with a higher income.
Married people, overall, had higher scores, with those who were in or had been in relationships or marriages ranking slightly lower. Singles that had never been married had the worst financial literacy scores.
Older people tended to be more financially literate, with the greatest jump in score from those under 18 to those 18 to 24. Those with more education also tended to know more about money. The survey found those that have post-graduate degrees ranked the highest overall.
By race, white non-Hispanics tended to have the highest financial literacy scores, Asian-Pacific Islander close behind, African-American respondents third, then Hispanics, and Native Americans tending to have the lowest financial literacy scores.
While the study’s findings may not be too surprising, the experts behind it conclude that more financial education could prove beneficial for many Americans. They suggest that more financial literacy classes in public schools could help remedy the problem.