Most millennials can’t answer simple financial questions correctly, according to a new nationwide survey. Only 17 percent of working Americans ages 25-40 could answer five basic financial literacy questions from Massachusetts Mutual Life Insurance Co. (MassMutual) Foundation’s FutureSmart Digital program correctly, according to the report. The questions were on topics including credit scores, compound interest and investing.
A major lack of financial education appears to be taking a toll on American’s financial health. Fifty-five percent of people said they don’t feel they have the financial knowledge to properly manage their finances, according to research from MassMutual.
Preparing students with financial knowledge can help build healthy financial habits. Most parents (72 percent) who had a child who graduated college in the past year said they wish they taught their child more about finances, according to a MassMutual poll conducted by PSB online.
FutureSmart Digital is a free financial education program designed for middle and high school students in partnership with education technology company EverFi. The program allows users to make choices related to real-life scenarios to achieve important goals including saving, job planning and budgeting.
The program also offers a free app that transforms the lessons from the program into a simulation game for smartphones and tablets. MassMutual Foundation recently reached one million students via the program -- halfway to the life insurance company’s goal of educating two million students by 2020.
After completing the course, 67 percent of program participants said they felt their financial knowledge had increased. Based on pre- and post-assessment data collected in the 2016-2017 academic year, 25 percent of the respondents who said they had not discussed finances with their parents said they were currently discussing the material at home that they learned in the course.
Survey Responses
When asked what question was the least important when investing your money, only 51 percent of young Americans chose the correct answer: Whether or not deposits can be made online. Other options included: When you will need to use the money; How risky the investment is; The expected rate of return on your investment; Don't know.
When asked which factor had the biggest impact on a credit score, only 52 percent of participants answered correctly: Your history of making payments on time. Other options included: The amount of money you owe on your credit cards; The number of years that you have used credit responsibly; Having a variety of types of credit; Don't know.
When asked, “If you opened a new savings account, which of the following accounts will grow your money the most?” 55 percent of respondents answered correctly: Account 1: Interest rate 2%; interest compounded daily. Other options were Account 3: Interest rate 2%, interest compounded monthly; Account 2: Interest rate 1%, interest compounded daily; Account 4: Interest rate 1%, interest compounded annually; Don’t Know.