Financial Literacy Education Statistics from FINRA’s NFCS

Financial EducationA national study showed a growing disconnect between the self-perceptions American consumers have of their finances and the real-world actions they take in day-to-day financial matters.

The 2015 National Financial Capability Study (NFCS) also detected a limited knowledge of rudimentary facts that are necessary in crucial decision-making situations, suggesting that financial literacy in the U.S. is a bigger problem than ever.

When asked about their skill with managing checking accounts and credit cards, 81% of American consumers rated themselves positively, but according to the NFCS survey, even the best perceived financial performers had major deficiencies.

Self-Perception of Financial Literacy Mismatch With Reality

Among the 42% of respondents who gave themselves a perfect score, nearly three of 10 (29%) engage in “expensive’’ credit card behaviors such as making only minimum monthly payments, using the card cards for cash advances or paying penalties for late fees or over-the-limit fees.

Another 18% used non-bank borrowing methods and 12% overdrew their checking account.

Trends In Financial Literacy

Meanwhile, in a quiz that covered topics such as interest rates, inflation, bond prices, mortgages and financial risk, consumers who correctly answered at least four out of five questions decreased from 42% to 37% in the past six years.

“I’m not surprised that financial literacy has gone down,’’ Annamaria Lusardi, one of the authors of the study and a professor at George Washington University, said. “The world is much more complicated now. Financial literacy is not a topic people learn by breathing the air.

“We must put this (courses on finance) in the schools. The stakes are too high. They are too many financial consequences if you fail to contribute to your retirement account, if you continually carry debt, if you don’t pay off your credit card. These concepts must go to the classroom at an early age, the same as if we are adding a foreign language or computer skills.’’

Some of the other findings from the study that was administered by the FINRA Investor Education Foundation and involved question for 27,564 adults from every state, include:

  • Males (3.5 correctly answered questions), people 55 and older (3.6), whites (3.4), Asians (3.2) and college-educated people (3.9) scored the highest in the financial-literacy quiz.
  • The amount of people who gave themselves a high-self assessment on financial knowledge (5 to 7 on a 7-point scale) increased from 67% to 76% in the past six years.
  • More than half (52%) said their parents or guardians did not teach them to manage their finances. But formal education had a bigger influence on scoring higher in financial literacy.

FINRA released its initial Financial Capability study in 2009 and has conducted it every three years since then, helping to provide an understanding of how consumers view their financial health. Gary Mottola, research director at FINRA Investor Education Foundation and an author of the study, said increased financial education programs would broaden access to financial products, protect consumers from poor practices and have a tangible influence on healthy, life-long financial practices.

“At this point in America, the need for financial education has far outpaced the supply,’’ Mottola said.

It’s costly to lack financial literacy education. Financial institutions sometimes target unsophisticated consumers with confusing and very expensive financial products. A 2016 study by the Social Science Research Network showed that most of the misconduct by financial advisers is found in firms located in counties with low levels of education and an elderly population.

Meanwhile, it pays to be financially savvy. According to a 2014 study in the Journal of Economic Literature, those with higher levels of financial literacy are more likely to plan for retirement, make better investment decisions, refinance mortgages at the optimal time and better understanding of debt management.

“It all begins with education,’’ Ric Edelman, the chairman and CEO of Edelman Financial Services said. “It makes all the other problems go away. Frankly, it should begin in kindergarten.

“In prior generations, there was no need to learn about personal finance. Life was much simpler. Now it’s catching up to attain the attention and credibility of other fields of study, some that have been around for hundreds of years.’’

Edelman said he has heard feedback from skeptical educators who believe a personal-finance curriculum would concentrate on investments and risk tolerance. Edelman said so much more would be taught.

The Need For Personal Finance Education

“We have a $1.3-trillion student loan debt and a huge population that doesn’t even know how interest is compounded,’’ Lusardi says. “And that’s just one example.’’

Lusardi said she’d like to see financial literacy become part of a national initiative. For now, there are learning opportunities around every corner.

“Young people have observed the problems their parents are having and hopefully the mistakes are instructive,’’ Lusardi says. “We don’t live in an unbiased environment. Everything around us is a push to buy, a push to consume, not a push to save.

“What we need is a way to make saving sound as exciting as consumption. When you think about it, saving gives us the capacity to reach our dreams, to be financially free, to make our own decisions and do the things we like. If people learned that and realized it, maybe some habits would change.’’

Joseph Birkofer, principal and owner of Legacy Asset Management in Houston, harkened to the 1950s, when he said there was a financial literacy curriculum. It was called home economics.

“Maybe it’s nostalgia, but today, the average American doesn’t know anything about mortgages or savings or interest or even the amount of the deductible they are carrying on their car insurance,’’ Birkofer says. “I think we need to get better — a lot better.’’


Kieffer, C., Lusardi, A., Mottola, G., Walsh, G., (2016), National Financial Capability Study, FINRA Education Foundation. Retrieved from

Lusardi A. and Mitchell O. (2014), The Economic Importance of Financial Literacy, Journal of Economic Literature. Retrieved from

Egan M., Metvos G. and Seru A. (2016, 1 March), The Market for Financial Adviser Misconduct, Social Science Research Network. Retrieved from