A new study reveals that while Americans are generally overconfident in their financial knowledge, only a few could score a top grade on a financial quiz.
The “Financial Literacy: Prosperity Begins with Knowledge” study from Raddon, a provider of innovative research, also found that the vast majority have never attended a financial education program, although many think such a program would be extremely or very valuable.
The research data, compiled from 1,200 online surveys of U.S. citizens 18 and older, found that nearly half of respondents (44 percent) reported that they are extremely or very financially literate. However, when asked to take a financial quiz, fewer than half passed, and only 6 percent scored an “A” grade of 90 percent or better.
Those scores aren’t that surprising when considering that 84 percent of U.S. consumers have not attended a financial literacy program.
“Financial institutions have a powerful role to play in developing financial literacy today,” said David Irwin, president, Raddon in a statement. “A majority of customers who participate in a financial education program find value, and in a market that is intensely experience- and relationship-driven, providing financial education can help institutions to stand out and build depth with their customers. Closing the gap between customer perceptions of their own financial literacy and reality will help them develop the skills to build financial health.”
Education might be able to help Americans who are struggling to stay financially afloat. The Financial Invisibles Report, created by PYMNTS in collaboration with Unifund, found that for nearly half of Americans, paying bills and maintaining financial stability is a daily struggle.
In fact, those who said they had attended a financial literacy program scored higher on the Raddon financial quiz. Researchers reported that education efforts should be focused on the most impactful areas, including money management, retirement and investments. And over a third of respondents (38 percent) agree, saying this type of financial literacy program would be extremely or very valuable.
“Imagine the benefits for both customers and institutions if this model played out,” said Irwin. “Banks and credit unions can provide the insights their customers need to thrive, and their customers’ financial success will in turn lead to deeper financial institution relationships.”