Are We Looking for Financial Education in All the Wrong Places?

By Dan Kadlec

March 31, 2017

Financial Literacy in Wisconsin

Financial education is most effective in high school and has its greatest impact in the area of credit management, according to a new poll from Right About Money and National Endowment for Financial Education.

The poll of U.S. adults comes on the eve of April financial literacy month and is scheduled for wide release next week. This is an exclusive report from Right About Money.

Three quarters in the poll say grades K-12 are one of the best places to learn about money—with 68% saying high school students are the best age to learn financial concepts. About half say financial literacy is most helpful in keeping out of debt and 39% say it is most helpful in managing credit.

Also scoring highly: 38% say financial literacy helps in sticking to a budget; 37% say it helps in retirement planning. (Results do not add up to 100 because respondents were asked to name their top three choices.)

These findings shed new light on how Americans expect and value money guidance—and also raise some troubling questions. For example, only 25% say the workplace is one of the best places for financial education. Yet increasingly the workplace is where people get the most financial instruction.

By some measures, financial education in schools has stalled. States like New Mexico and Mississippi are backsliding on their commitments. In Canada, Quebec is in the throes of an epic kerfuffle over school-aged financial education. The number of states where schools require courses in personal finance or economics remains low.

Meanwhile, workplace financial wellness programs that include instruction on credit, budgets, retirement planning and much more are blossoming all over and may constitute the next must-have employee benefit. Yet in the poll, K-12 financial education is seen as far more effective. More than half also chose college-aged financial education as most helpful.

This represents a serious disconnect, which probably reflects the relative newness of workplace financial literacy programs. Many workers are only beginning to make use of them. Experts generally believe these programs will have best results in areas like retirement planning and life-stage decisions like getting a mortgage.

The focus on debt and credit management is not terribly surprising. Americans generally carry a lot of debt and struggle to manage it well. The troubling aspect is that those struggles persist even as the poll shows that people feel financial literacy is most helpful in avoiding debt and managing credit.

People over age 65 are most likely to feel that financial education is helpful in avoiding debt, suggesting they may have lived a long life with credit issues—and perhaps younger folks should take those concerns to heart. Women are far more likely than men to cite keeping out of debt as a chief benefit of financial education. Somewhat predictably, individuals ages 18-34 are twice as likely as other groups to cite saving for college as a chief benefit of financial literacy.

Only 9% say financial education is helpful both in becoming a successful investor and saving for college. Yet investing properly is critical to reaching financial security, even if investing properly means nothing more than maxing out on a 401(k) plan and putting everything in a target-date mutual fund.

Only 11% say financial literacy is helpful in having a happy marriage. We can salute this optimistic love-trumps-all mindset. But reality is that money is the third biggest source of discord in a union, cited as the main reason in 22% of divorces. Men are more likely than women to say that financial literacy is most helpful in a happy marriage.

On the encouraging side, just 1% say financial education will help them pick a stock that doubles quickly, perhaps a broad recognition that short-term results in the stock market are as much about luck as financial prowess. Getting rich quick is not what financial education is about—and most seem to understand that.

More on financial education in the states: 

Soaring Poverty and Failing Financial Literacy in Mississippi

Financial Education Battle Reaches a Boil in Quebec

Budget in Shambles, New Mexico Opts Out of Financial Education

Teacher Pushback in Canada

These States Rank Best, Worst in Financial Literacy

Posted in Adults, Exclusive, International, Latest Research, Policy & Government on March, 2017