U.S. teenagers ranked “painfully average” in a just-released world ranking of financial literacy skills.
American 15-year-olds’ placed between eighth and 12th compared to over 29,000 students in 65 countries across the globe.
The test scores were from the high profile Programme for International Student Assessment, or PISA, for short.
“We certainly were disappointed, but not surprised,” says Ted Beck, CEO of the National Endowment for Financial Education, which participated in the study’s release in Washington D.C.. “This is not where we want to be as a country.”
What country scored highest?
Students in China had the highest score.
Students in Colombia scored lowest.
Why does the U.S. score so poorly?
The study found that students’ financial literacy is directly related to their competency in mathematics and reading.
Unfortunately, the PISA study ranked the United States below average in math and average in reading compared to the 64 other countries participating in the research. Ouch!
What can you do?
Talk to your kids about money
“Parents are the single greatest influencers of positive financial behaviors in their children,” says Beck. Even if they are not good at managing money themselves, talking to their kids about money and letting them know they expect them to save, budget and invest responsibly can make an impact.
Focus on math and reading skills
It all goes back to the basic 3 R’s. Kids who don’t understand math, and haven’t mastered critical reading skills, are going to have a hard time making good decisions about student loans, credit cards, mortgages and 401(k)s. This is especially true for girls, who seem to lose interest in math and science – perhaps in response to peer pressure – in middle school.
Make it fun and practical
Kids learn best through real-life examples and practice. Opening a bank account, getting a job and understanding their paycheck, preparing a tax return, funding a Roth IRA … these are all great ways to learn about money and develop real-life skills.
Put real-life financial expertise in the classroom
According to NEFE, only 19 percent of K-12 teachers feel competent to teach personal finance. But there are plenty of community experts ready to pitch in. For years, I’ve volunteered experienced Certified Financial Planners™ (CFPs®) from our local Financial Planning Association to speak or teach at local schools or other community groups for free.
Support financial literacy however you can
Volunteer, teach, mentor or support financial literacy programs in the way that works best for you. You can do that through your schools, or groups as diverse as the Girl Scouts, Junior Achievement, or AARP. Our firm also contributes financially to the Global Financial Literacy Excellence Center at George Washington University, directed by world financial literacy expert Prof. Annamaria Lusardi, which hosted the U.S. release of the PISA research data this past July.