Most Americans fail when tested on financial literacy, a recent survey by the National Financial Educators Council (NFEC) finds.
Of the 10,508 people participating in the NFEC’s advanced financial literacy test, just 43% earned a passing grade while 56% failed, with only 58% of the questions being answered correctly on average.
The advanced financial education test is focused solely on financial literacy topics. This includes questions on loan payments, inflation, risk-based pricing, FICO scoring, loan qualification and investment topics. The test is suitable for high school students, college students and adults.
In a separate NFEC survey of 1,251 people around the U.S. conducted between Sept. 26 and Oct. 1, 2020, respondents were asked a single question: “When you have a financial question, who do you personally turn to for trusted financial guidance?”
• 39.6% turned to parents, family, friends, or coworkers
• 35.9% said financial professionals
• 24.4% responded “I don’t have anyone trusted to turn to”
“It’s clear that people who don’t yet have money available to invest into real estate, insurance products, or equities lack access to qualified professionals to consult for financial guidance,” said Vince Shorb, CEO of the NFEC. “It’s essential for people to gain access to guidance and solid information when they’re young, because the financial decisions they make as young adults will have direct impact on their financial futures.”
When people have access to professional advice for financial decision-making, they become informed about more options that line up with their short- and long-term goals, NFEC said in a statement, adding that the new survey results indicate that such access to professional guidance is largely lacking, especially among the younger age ranges.
The NFEC has embarked on a series of research studies to illuminate how and where people obtain guidance and support for key financial decisions. The results will inform the fine-tuning of the NFEC’s financial coaching training and materials, to help ensure access to individualized financial guidance and education for those people who need it most.
In a broader sense, NFEC research focuses on empirically demonstrating the best practices for financial wellness programs to share with others in the industry. The organization is diving deeply into the questions of how people make personal finance decisions, how their financial situations affect their lives, and their levels of capability to make informed choices that align with their personal objectives.
Financial coaches and financial wellness professionals can apply these data to effectively promote clients to build their personal finance skill sets.
The National Financial Educators Council (NFEC) provides resources, advocacy, and research results to the financial education industry. A recognized thought leader, the NFEC sponsors think tanks and collects empirical data on financial literacy-related topics, with the central goal of discovering best practices to share with colleagues in the financial education arena.
SEE ALSO: