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When it comes to money, American teens have a lot to learn.
That was a finding of a recent financial literacy test administered by the Paris-based Organisation for Economic Cooperation and Development. It was the first test of its kind, assessing teens’ knowledge of personal finances – including banking, taxes and how interest rates work – and their ability to apply those skills to financial problems.
Of the 18 countries tested, the U.S. ranked ninth, sandwiched between Latvia and the Russian Federation. Chinese students in Shanghai (the only Chinese city tested) earned top scores. Belgium, Estonia, Australia and New Zealand also ranked near the top. Colombia, Italy and the Slovak Republic rounded out the bottom three performers.
In a press release, the OECD said the overall results of the 29,000 15-year-old students it tested were less than impressive.
“Around 1 in 7 students … are unable to make even simple decisions about everyday spending, and only 1 in 10 can solve complex financial tasks,” OECD said.
One seemingly simple question from the test required that teens know how to read a pay slip and understand the difference between gross and net pay.
Nearly 20 percent of U.S. students didn’t even reach the baseline level of proficiency, “or the basic skills that are needed for success later in life,” according to Michael Davidson, head of early childhood education at the OECD.
The Associated Press said just 19 states in the U.S. require a personal finance course in high school.
The OECD defined financial literacy as an essential life skill for teens. The test results indicate that the U.S. has a lot of work to do when it comes to educating its kids on financial matters. CNN Money said:
“If we want to have young people who are globally competitive in 20 years, having a good solid basis of understanding their financial lives early is important,” said Ted Beck, president of the nonprofit National Endowment for Financial Education. “This should be a national priority.”
How well would you score on the test? Find out here.
When I was a senior in high school, I had a free period open, so my mom encouraged me to take our school’s “Prep for Life” class. Financial literacy was one of the focuses of the class. We learned how to write a check, balance a checking account and make a monthly budget (for rent, food, entertainment, gas, utilities, etc.). That was it, but I guess it’s more than some students get.
Were you surprised to see where American teens rank when it comes to financial matters? Share your thoughts below or on our Facebook page.