How Education, Region and Sex Weigh on Financial Education
By Barbara Kiviat
October 30, 2016
Academics and policymakers havebeentalking about the National Financial Capability Study since its summer release showed positive trends in how Americans experience their financial lives. The survey of more than 25,000 adults found that, compared to 2009 and 2012, Americans are more likely to be covering expenses with their income, setting aside money in an emergency fund, paying off credit cards in full each month, and happy about their overall financial condition.
But the news could be better. The latest survey, sponsored by the FINRA Investor Education Foundation, highlights a number of persistent problems, including struggles to stay current with student loan payments, frequent decisions to forgo medical treatment for financial reasons, and a lack of retirement planning and optimism about having enough money to last through one’s non-working years.
Beyond these broad trends, the researchers point to measures of financial capability, like making ends meet and planning ahead, which vary dramatically by demographic group. For example, respondents were more likely to do well on a financial literacy quiz when they were male, older, white, Asian, or held a college degree. (Though doing well is a relative concept, considering the average respondent only got 64% of the quiz right.)
I dug a little deeper into the data that FINRA posts to this web site. There are, of course, many reasons different groups of Americans might do differently on a quiz of financial literacy. But one survey question that caught my eye asked whether the respondent had ever been offered financial education–in school or at work.
If financial education is an important foundation for financial capability, then we might want to pay attention to whether different groups of people are getting the same opportunity to take advantage of such education. They aren’t.
Looking at differences by geography, the variation is large. In Utah, the highest scoring state, 40% of respondents said they’d been offered financial education, while in West Virginia, the lowest, only 26% of respondents had been offered financial education. Other low-scoring states included Alabama (27%), Washington (27%) and Texas (28%), while other high-scoring states included Georgia (37%), the District of Columbia (35%), and Alaska (35%).
Differences also exist by sex. Some 36% of men said they’ve been offered financial education, while only 28% of women did.
The gap by education is even more striking. Just 20% of people with a high school diploma, and only 17% of those with a GED reported being offered financial education, while 34% of people with an associate’s college degree did, and 40% of those with a bachelor’s degree. While it makes sense that the longer a person stays in school, the more chance they’d have for financial education, these numbers could also reflect the type of workplaces and jobs that do—and don’t—offer financial education. It also underscores the need for financial education in high school and even earlier.
Now, being offered financial education is different from getting financial education, and only about two-thirds of respondents survey-wide who were offered such education participated in it. But being offered education is the necessary first step.