How Do U.S. Teens Fare in Financial Know-how? Meh.

U.S. students in middle of pack on financial know-how
Dinesh Ramde/AP
By JENNIFER C. KERR

WASHINGTON -- The United States runs in the middle of the pack when it comes to the financial knowledge and skills of 15-year-old boys and girls, according to an international study released Wednesday.

China's financial hub of Shanghai had the highest average score for teens who participated in the testing for the Paris-based Organization for Economic Cooperation and Development. A total of 18 countries and economies were studied. Shanghai was followed by the Flemish Community of Belgium, Estonia, Australia, New Zealand, the Czech Republic, Poland, Latvia, the U.S., Russia and France.

At the bottom of the list: Croatia, Israel, the Slovak Republic, Italy and Colombia.

The testing is part of OECD's Program for International Student Assessment, which aims to evaluate education systems worldwide. This is the program's first assessment of financial literacy of teens.

LITERACY
The questions on the two-hour paper test ranged from simple to complex.

The easiest questions asked students to display basic financial literacy skills, such as recognizing the purpose of an invoice or comparing prices per unit to determine which had a better value.

The most difficult asked students to analyze more complicated scenarios, such as reviewing two loan proposals with differing rates and terms and choosing the better offer.

Shanghai notched the top average score of 603 points on the test. The U.S., by comparison, had an average score of 492, and Colombia, at the bottom, scored 379.

So what is Shanghai doing right?

Michael Davidson, head of schools for the OECD, says Shanghai schools identify students who are struggling and provide the support they need. Successful systems, he said, are ones that don't let students fall behind.

The financial literacy study was administered in 2012 to approximately 29,000 15-year-old students in 13 OECD countries and economies and five partner countries and economies.

Across all 18 countries and economies, only 1 in 10 students could solve the hardest financial literacy questions on the test, the report said.

In the U.S., only 9.4 percent of the students taking part in the study were able to solve the most difficult questions. More than 1 in 6 U.S. students didn't reach the baseline level of proficiency in financial literacy. At best, said the report, those students could make only simple decisions on everyday spending.

The OECD's Davidson said being grounded in financial literacy is crucial to teens preparing to decide whether to enter the job market or embark on college and university educations.

Many, he said, already use financial products in their daily lives. In the U.S., for example, about 50 percent of the 15-year-olds said they have a bank account. About 15 percent said they have a prepaid debit card.


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steblawar

Hmm, financial knowlege ... maybe we should test our teachers because a whole lot of people don't seem to know too much about finances and "somebody" must be responsible for not teaching even the basics -- can't teach what you don't know. I'm not talking just the simple "math" per se, Like if a dozen eggs cost 96 cents how much does each egg cost? But rather if your hens lay 20 dozen eggs a day and it costs you 75 cents a day to feed them, 30 cents a day to house them, 10 cents a carton for each dozen and 4 hours of your time a day to collect, package, and sell the eggs ... how much would you have to sell the eggs for to earn $10.00 an hour for your labor? How much would your earn per hour of labor if all you could sell your eggs for was 96 cents a dozen? Those would be the easy ones.

July 09 2014 at 7:20 PM Report abuse +1 rate up rate down Reply
mac2jr

We need Grade 13, a grade that teaches students the basic of 'life and its expenses'.

How much does a swimming pool cost? How much does a vehicle cost? An education? A baby? etc...

What insurance do you really need? How do you save for retirement? What college degree is needed in 10, 20, 30 years?

How much does marriage cost? Divorce? Dating? Breaking up?

Add to all this the items needed by Business, such as accounting, engineering, inventory control, production methods, etc.

Adding Grade 13 to our High Schools, and making it manditory should be a priority for all States; and I believe most teachers and parents would agree.

Wake up America, WAKE UP.... please...

July 09 2014 at 11:04 AM Report abuse -4 rate up rate down Reply
2 replies to mac2jr's comment
ted_wilson7

We need Grade 13, a grade that teaches students the basic of 'life and its expenses'.******* Yeah, considering their parents are a bunch of illiterate government sponsored " hand out queen ". let's burden society with additional giveaway " social programs".

July 09 2014 at 11:11 AM Report abuse +3 rate up rate down Reply
Valerie

@ Mac --- unfortunately, most parents and teachers are not any more financially knowledgeable than clueless teenagers are. (The staggering amount of trillions of personal consumer credit card debt in the U.S. is proof of this.)

No one can teach knowledge that they don't have.

July 09 2014 at 7:24 PM Report abuse rate up rate down Reply