Quiz findings reveal concerning personal finance knowledge gaps among the nation’s top thinkers.
NEW YORK, April 1, 2024 /PRNewswire/ — Goalsetter, an award-winning family monetary education-focused spending and savings platform, today released the findings of its latest study, “Are You Monetarily Better Than a 12th Grader?”, a penetrating look at the state of financial literacy for students in America’s major universities. Students received an average of 51% on the exam, which indicates a significant gap in understanding the fundamental concepts of personal finance.
The examination, conducted by Goalsetter, evaluated the economic education levels of 1065 undergraduate students at three of the Top Ten institutions through an online survey mapped to Jumpstart.org and the Council for Economic Education (CEE) high school financial literacy standards. The findings revealed a startling gap in fundamental financial knowledge, indicating the need for more comprehensive financial education programs for American teenagers and young adults.
55% of students believed they had “a solid understanding of core personal finance concepts” before taking the quiz. The percentage of students who felt confident in their knowledge dropped to 30% after responding to the 15 quiz questions.
Key findings of the assessment include:
- Below Average Scores: On average, students scored 51%, with underclassmen scoring even lower at 48%, both of which would be considered failing grades.
- Budgets and Saving: Not surprisingly, 93% of students surveyed have a debit card, indicating their familiarity with spending. However, only 48% understood the power of compound interest, and only 47% knew the 50/30/20 rule of budgeting.
- Credit and Debt Management: While 70% reported having a credit card, the majority don’t understand recommended strategies for managing credit card debt.
- Investing and Retirement: Of the 1,065 students who took the quiz, 58% plan to retire early, but only about half of those who do understand what an IRA is.
“The results of this study underscore the critical need for earlier preparation when it comes to financial education,” said Tanya Van Court, CEO of Goalsetter. “When we put debit and credit cards into kids’ hands as teenagers but don’t teach them core concepts of saving, investing, and budgeting, we are teaching them to be proficient ‘senders and spenders’ of money rather than savers and investors. No single socio-economic group is immune to the dangers posed by a lack of financial literacy. The development of a financially literate future generation contributes to our country’s economic security.”
The results of the Goalsetter quiz are in line with the 2022 TIAA Institute-GFLEC Personal Finance Index, which found that on average, adults could only respond to about 50% of the 28 basic money questions asked to gauge their knowledge. More importantly, approximately 23% got seven or fewer questions correct, the worst results of any year the survey was administered.
Van Court argued that “we set our children up for trial and error, making them susceptible to costly mistakes” when we don’t provide them with the financial knowledge they will need for everyday decisions. Additionally, we prevent them from acquiring the fundamental knowledge necessary to create wealth before beginning their wage-earning years. Time is a crucial component of the equation for creating wealth. They will likely reduce their overall net worth if they don’t have enough financial knowledge each year. It can take a long time to learn concepts that you should have learned when you’re 28 years old.
Goalsetter is leading efforts to include features like “Learn Before you Burn,” which freeze children’s debit cards if they haven’t taken their financial literacy quiz for the week yet, as part of its advocacy.
Goalsetter also provides weekly financial literacy quizzes for students from kindergarten through college that are based on the national financial literacy standards established by the Council for Economic Education and Jumpstart.org.
Goalsetter works with banks, credit unions, and wealth management companies to offer its next-generation education and banking solution to children all over the country. Financial institutions are able to support a robust suite of middle school, high school, and community college curriculum as well as offer a white-labeled youth banking product through the Goalsetter platform.
The curriculum covers basic concepts such as budgeting, saving, interest rates, and debt management, as well as investing, retirement planning, and long-term wealth building.
For more details, see “Are You Financially Smarter Than a 12th Grader” for more details. quiz and to access the full report, visit https://goalsetter.co/financial-literacy-quiz/.
About Goalsetter
Founded in 2016, the affiliated Goalsetter Companies are family saving, investing, financial education, and smart spending platforms that make it easy for the whole family to go cashless while teaching them how to be money smart. Centered around fun, relevant, and engaging financial education content, Goalsetter companies’ smart money platform for families provides users with an FDIC-Insured Savings Account; an investment platform powered by Goalsetter Advisors, LLC (an SEC registered investment advisor); the Mastercard Cashola teen and tween debit card with parental controls, game-based financial education quizzes; the “Learn before you Burn” parental control feature on the debit card and the “Learn to Earn” financial reward program; as well as the latest cybersecurity features to protect user privacy. Goalsetter was founded by former Nickelodeon and Discovery Education children’s digital programming executive Tanya Van Court. For more about Goalsetter visit www.goalsetter.co.
Goalsetter is a financial technology company, not a bank. Banking services are provided by Webster Bank, N.A., Member FDIC.
Cashola Prepaid Debit Mastercard® is issued by Pathward, N.A., Member FDIC, pursuant to license by Mastercard International Incorporated. The circles design and Mastercard are trademarks of Mastercard International Incorporated.
Goalsetter Advisors, LLC d/b/a Goalsetter Gold is a SEC registered investment adviser and an affiliate of Goalsetter. Goalsetter Gold offers investment advice, but investments in your Goalsetter Gold account are not FDIC insured, are not guaranteed by banks, and may lose value.