Two-Thirds of Americans Struggle with Financial Literacy | S

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover how financial literacy impacts retirement planning. Learn about safe money alternatives to secure your future. Explore more at SafeMoney.com. Editor’s Note: This is the first part of a four-part series on financial literacy in the United States. Stay tuned for more helpful articles on how you can reach the retirement you have worked hard to attain. Now that April is here, it’s National Financial Literacy Month. This is a good time to gauge our knowledge and comfort with money matters . Why? Well, because financial literacy is something that affects all of us. In its research, the FINRA Foundation has found that financial literacy is “strongly correlated with behavior that is indicative of financial capability.” People with high literacy are more likely to plan for retirement, have an emergency fund , and avoid expensive credit card debt. In turn, those behaviors can lead to quality-of-life outcomes, including more financial wellness, more confidence, and more peace of mind. But in the same breath, studies show a gap between what Americans say they know and how they actually rank in their financial knowledge base. A recent study brief by the FINRA Foundation drives it home. In the study, nearly two-thirds of Americans failed a quiz on basic financial concepts. What Did the Study Find?  Over 20,000 people were given a five-question exam. It included multiple-choice and true-or-false questions on topics including: Calculating interest payments Estimating savings growth Judging different financial risks Knowing the relationship between interest rates and bond prices Understanding basic debts like mortgages What’s interesting is that multiple generations were well-represented in the survey. Baby boomers were the dominant group at 37%, Gen Xers made up 33%, and Millennials were roughly 30%. The national average for correct answers was just a score of 3.1. The results match those of earlier years. Across a 6-year period, the FINRA Foundation recorded that these financial literacy rates stayed the same — and, at times, even decreased. Even so, self-rated reports of financial knowledge shot through the roof. For example, in 2009 75% of Baby Boomer men rated their financial knowledge as high. Then, six years later, it went up to 85%.  Why Do