WALL STREET JOURNAL:
By Annamaria Lusardi
Annamaria Lusardi (@A_Lusardi) is the Denit Trust Chair of Economics and Accountancy at the George Washington University School of Business, where she focuses on financial literacy, personal finance and macroeconomics.
People often argue that financial knowledge can be acquired with experience. But if the evidence from a new survey index is any indication, that way of learning may, in fact, be very slow or not work well at all.
The TIAA Institute-GFLEC Personal Finance Index, or P-Fin Index for short, provides a snapshot of Americans’ understanding of basic financial concepts. And the results don’t look too promising.
U.S. adults surveyed only answered about half the questions in the index correctly. Just 16% demonstrated a relatively high level of personal-finance understanding; they answered more than three-quarters of the questions correctly. But what was surprising is that Americans’ knowledge of personal finance is low even among people who have already made many important and fundamental financial decisions. This includes older Americans who own investment assets.Specifically, by age 45 only 10% of respondents could answer more than three quarters of the survey questions correctly.
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