Fourth place! When it comes to financial literacy, the International Financial Literacy Barometer indicates the United States ranks fourth out of 28 countries. If you’re thinking those sophisticated Europeans must have an edge on us, you’re wrong. The top five countries were Brazil, Mexico, Australia, United States, and Canada.
The rankings were determined by the answers to five questions:
1. Do you have and follow a household budget? The best budgeters were in Brazil, Japan, Australia, South Africa, and Canada. The United States placed sixth.
2. How many months worth of savings do you have set aside for an emergency? The best savers were in China, Taiwan, Hong Kong, Japan, and Canada. The United States placed seventh.
3. How often do you talk to your children ages 5-17 about money management issues? Parents who talked most frequently about money with their children were in Mexico, Brazil, Serbia, Bosnia, and Lebanon. The United States placed sixth.
4. To what extent would you say teenagers and young adults in your country understand money management basics and are adequately prepared to manage their own money? More adults in Vietnam, Indonesia, India, Colombia, and Mexico believed kids understood financial basics than in other countries. The United States placed 27th.
5. At what age do you think governments should require schools to teach financial literacy to children so they can better understand money management issues? People in Brazil, Morocco, Thailand, Belarus, and Egypt wanted to talk with kids about money at the earliest ages. Americans said the government should require children to learn about money at about age 12. That put us in 21st place.
It’s remarkable we placed fourth when our ranking on individual questions was lower in every instance. Our final ranking was higher, in part, because the first three questions were weighted more heavily than the latter two.
If you’re interested in educating your children about money, a good place to start (with younger children) may be with the Tooth Fairy. In 2014, the Tooth Fairy left 8 percent less, on average, under kids’ pillows than in 2013. American children received about $3.40 per tooth. Ask your children why that might be? Are kids losing more teeth so the Fairy is paying less? Did the Fairy budget badly? Are some teeth worth more than others (cavities versus no cavities)? It’s always easier to learn when you’re interested in the subject!
Think About It
“Age is an issue of mind over matter. If you don't mind, it doesn't matter.”
--Mark Twain, American author