Making The Case for Financial Literacy 2011

A collection of personal finance statistics gathered from other sources. 

Financial Literacy Education

 

Adults and Parents

1.  A 2010 American Express survey of parents with children between the ages 6-16 revealed that:

  • 71% of parents say their children understand we are in a recession.
  • 91% of parents say they are committed to instilling lessons of financial responsibility upon their children in 2010, with 62% giving their children a weekly allowance.
  • One in five children (20%) has indicated to a parent that "maybe we shouldn't buy that due to the recession."

[American Express, Children Clued In to Recession and Family Finances, February 16, 2010, http://home3.americanexpress.com/corp/pc/2010/cci.asp

2.  The 2009 annual back-to-school survey of more than 1,150 parents and teens from Capital One found that:

  • More than 80% of parents reported they had not worked out a budget with their teens for back-to-school shopping.
  • 58% said that their back-to-school shopping will be impacted by economic concerns. Nearly 20% plan to spend less than they did last year on school materials.
  • Half of teens (50%) expressed an interest in learning more about money. 70% wanted to learn more about financing for large purchases such as a car or home.
  • Although teens said they prefer to learn about money from their parents over friends, reading a book or taking a personal finance class, only 24% said their parents discuss money management and banking concepts with them regularly, 13% of teens said their parents never discuss money with them.

[Capital One, Capital One’s Annual Survey Finds Parents Plan More Back-to-School Shopping Cutbacks This Year, August 11, 2009, http://phx.corporate-ir.net/phoenix.zhtml?c=70667&p=irol-newsArticle&ID=1320569&highlight]

3.  A 2009 Financial Literacy Survey of adults, conducted on behalf of the National Foundation for Credit Counseling, Inc., revealed that:

  • 41% of U.S. adults, or more than 92 million people living in America, gave themselves a grade of C, D, or F on their knowledge of personal finance, suggesting there is considerable room for improvement.
  • One-third of adults (32%) report that they have no savings and only 23% are now saving more than they did a year ago because of the current economic climate.
  • 26% admit to not paying all of their bills on time.
  • Among adults who have children under the age of 18 living in their household, 33% want to provide a college education for their child but have not done anything about it yet, 18% have established an education savings account but doubt they can finance four years of college without taking out any loans, and 15% say their children will have to pay for college themselves. Only 21% have established a 529 Plan or other education savings account and expect to be able to pay for four years of college for their children.

[The National Foundation for Credit Counseling and Harris Interactive Inc., Public Relations Research, The 2009 Consumer Financial Literacy Survey, March, 2009, http://www.nfcc.org/newsroom/FinancialLiteracy/files/2009FinancialLiteracySurveyFINAL.pdf]

4.  A 2008 Visa survey of parents with children under 18 revealed that:

  • 85% of parents say they talk to their child regularly about money management.
  • One-third (34%) say they talk to their child on a daily basis about using their money wisely, three in ten (31%) talk to them at least once a week, 14% at least once a month, and less than one in ten (6%) say a few times a year.
  • However, 16% report never talking to their children about using money wisely.

[Visa, Most Parents Talk to Their Kids About Using Money Wisely, Visa Study Finds, August 12, 2008, http://www.practicalmoneyskills.com/english/presscenter/releases/081208.php]

5.   According to a 2008 survey by The Hartford Financial Services Group, Inc.:

  • 55% of parents with children aged 16-24 voiced concern over their children's ability to become financially independent without monetary assistance from them.
  • Nearly 72% of the parents surveyed acknowledged that they are their children's primary source of personal finance education, although 44% admit to needing more guidance on how to best teach their children the skills necessary to become financially responsible and successful adults.

[The Hartford Financial Services Group, Inc., Amid Economic Uncertainty, New National Survey Finds Parents Concerned About Children's Future Financial Independence, April 14, 2008, http://ir.thehartford.com/releasedetail.cfm?ReleaseID=304399]

 

6.  Charles Schwab’s 2008 “Parents & Money” survey revealed that:

  • Only about one in three parents (34%) have taught their teen how to balance a checkbook, and even fewer (29%) have explained how credit card interest and fees work.
  • While 71% agree that the best way for teens to learn about money is from guided, hands-on experience or their own example, only one in five parents (20%) involves their teen to a great extent in the family’s budgeting and spending decisions.
  • 93% American parents with teens worry their teens might make financial missteps such as: overspending or living beyond their means (67%), getting in over their head with credit card debt (65%), failing to save for emergencies (60%), or failing to stick to a budget (57%). And a full third of parents (33%) anticipate their “golden years” will likely involve helping their kids financially.
  • But while the majority of parents consider learning about budgeting (63%) and credit card management (55%) to be more important for today’s teens (than when they themselves were young), far fewer claim to have taught their children these basics (49% and 29%, respectively).
  • More than 67% of parents think that learning about money management, including budgeting, saving and investing, is not one of their teen’s top priorities. However, previous research shows otherwise: 60% of American teens identified it as a top priority in Schwab’s 2007 Teens & Money Survey.
  • More than one in four parents surveyed (28%) are not currently saving for either their own retirement or for their child’s college education.
  • While investing is cited by almost half (49%) of parents as more important for today’s youth to learn about than it was a generation ago, few are teaching their kids about it. Nearly all parents (97%) believe it’s important to teach their teens to save and invest for retirement and almost half (48%) worry that their kids won’t start saving soon enough, yet only 19% have taught their teens how to invest money to make it grow and even fewer (14%) have taught them what a 401(k) plan is.
  • More than two-thirds of parents (69%) admit to feeling less prepared to give their teens advice and guidance about investing than they do the “birds and the bees.”

[Charles Schwab, Schwab “Parents & Money” Survey Offers Prescription for Raising Financially Healthy Kids, March 26, 2008, http://www.businesswire.com/portal/site/schwab/index.jsp?ndmViewId=news_view&ndmConfigId=1010973&newsId=20080326005384&newsLang=en]

Undergraduate & Graduate Students

  1. According to the 2009 Young Adults & Money Survey sponsored by Charles Schwab:
  • The majority (52%) of young adults between the ages of 23 and 28 consider "making better choices about managing money" the single most important issue for individual Americans to act on today.
  • 64% say financial fitness is more important than physical fitness, and the majority (51%) believe that financial education in school, grades K-12, is more important than both physical education (31%) and sex education (18%) combined.
  • 36% agree that the single most important action the Obama Administration could take to improve financial literacy in the United States would be to create incentives (or provide additional funding) for states that mandate personal finance in the standard high school curriculum.
  • More than three in four young adults describe their financial health as either "a little flabby" (55%) or "seriously out of shape" (27%).
  • On average, those surveyed carry more than $14,000 in debt (excluding home mortgages). Of those who use credit cards, only one-third (33%) pay off their entire balance every month, while the other two-thirds make payments less reliably.
  • The majority (56%) attribute their knowledge of money management basics to their parents, with significant numbers continuing to turn to their parents for ongoing financial advice (43%).
  • However, many in this age group admit they don’t feel adequately prepared to make good financial choices when it comes to using debt wisely (28%), saving for the future (40%) or investing their money (43%).
  • When asked which aspects of personal finance they wish they had learned more about before entering the workforce, living within a budget (45%), and the importance of saving (42%) rise to the top of the list.

[Charles Schwab and Lieberman Research Worldwide, Young Adults & Money Survey, January 2009, http://www.schwabmoneywise.com/views/families-and-money/young-adults-and-money/index.php]

  1. Sallie Mae’s 2008 survey of how undergraduate students use credit cards revealed that:
  • Only 2% of undergraduates had no credit history. 39% of students arrived on campus as freshmen with a credit card already in hand.
  • 84% of the student population has credit cards; half  had four or more.
  • Undergraduates are carrying record-high credit card balances. The average (mean) balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004’s $946 to $1,645. 21% of undergraduates had balances of between $3,000 and $7,000.
  • Only 15% of freshmen had a zero balance, down dramatically from 69% in the fall of 2004. The median debt freshmen carried was $939, nearly triple the $373 in 2004.
  • Seniors graduated with an average credit card debt of more than $4,100. Close to one-fifth of seniors carried balances greater than $7,000.
  • Nine in 10 undergraduates reported paying for direct education expenses with credit cards.
  • Nearly one-third (30%) put tuition on their credit card, an increase from 24% in the previous study.
  • 60% of undergrads experienced surprise at how high their balance had reached, and 40% said they have charged items knowing they didn’t have the money to pay the bill.
  • Only 17% said they regularly paid off all cards each month, and another 1% had parents, a spouse, or other family members paying the bill.
  • Two-thirds of survey respondents said they had frequently or sometimes discussed credit card use with their parents. The remaining one-third who had never or only rarely discussed credit cards with parents were more likely to pay for tuition with a credit card and were more likely to be surprised at their credit card balance when they received the invoice
  • 84% of undergraduates indicated they needed more education on financial management topics. In fact, 64% would have liked to receive information in high school and 40% as college freshmen.

[Sallie Mae, How undergraduate students use credit cards: Sallie Mae's national study of usage rates and trends, 2009, March 2008, http://www.salliemae.com/about/news_info/research/credit_card_study/] 

  1. A 2008 U.S. PIRG survey of college students revealed that:
  • Nearly two in three students (66%) reported that they had at least one credit card. Of these, 30% reported that their parents paid the bill. 36% (or just over half of the remainder) reported that they paid the full balance on their primary card each month and just under half of the remainder (34%) reported carrying a balance from month-to-month.
  • One-fourth of the students said that they have paid a late fee, and 15% have paid an "over the limit" fee.
  • Three of four students (76%) reported stopping at tables to consider offers or apply for credit cards. Of students who reported stopping or applying at on-campus tables for credit cards for free gifts ranging from t-shirts to blankets to sandwiches or pizza or even an iPod shuffle.

[U.S. PIRG, The Campus Credit Card Trap, March 2008, http://www.uspirg.org/newsroom/financial/financial-privacy--security-news/washington-d_c_-students-support-fair-campus-credit-card-marketing-principles]

  1. According to a 2008 study of college students sponsored by the National Association of Retail Collection Attorneys:
  • 31% of students polled do not worry about debt, believing that they can pay it back once they are out of school and earning a regular paycheck.
  • More than 25% think it is reasonable to run up a debt to splurge on a special celebration with friends at a restaurant or to use a credit card as a way to "raise cash."
  • An average of 23% chooses to ignore overdraft penalties and the prospect of months or years of paying off a debt incurred for a moment of fun.
  • Less than half (46%) always keep records of their spending and receipts.
  • 92% agree that bad debt - defined as failure to pay bills that extends so long that a debt collector has to contact the consumer - will have a significant impact on a person's ability to get credit in the future.
  • 42% of those who already have been contacted by a debt collector would develop a payment plan to repay the debt over time.

[CardWeb.com, Student Behaviors, August 27, 2008, http://www.cardtrak.com/news/2008/01/09/teen_spirit]

American Kids & Teenagers

 

 

  1. A 2010 survey by the College Savings Foundation revealed that:

 

  • Three quarters (75%) of 16-17 year old high school students surveyed said that it is their responsibility to fund part or all of their higher education costs.
  • 77% of high school students surveyed are grappling with tradeoffs, saying that the cost of school will definitely (30%) or possibly (47%) influence their further education plans. Of these students, 55% said that costs will be a factor in which college they decide to attend.
  • Seventy percent of all students are talking to their parents about how much college costs. And despite 55% of their college savings being affected by current market, only 28% of all students said that college funding had created anxiety in the household.
  • 45% of all students surveyed have already begun to save and, of those, 43% have already amassed between $1,000 and $5,000 towards college. This same subgroup has shown its mettle against the pull of immediate gratification with over half (54%) giving up things like electronics, vacations or cars to save for college.
  • 68% have not researched any type of student loan. Of the 66% who are taking out or considering loans, 80% has not projected the total amount they will need to graduate, and 82% hasn’t calculated the monthly loan repayment amount.

[College Savings Foundation, High School Students Step Up to Fund Their Own College Costs, Says College Savings Foundation Survey, February 25, 2010, http://www.collegesavingsfoundation.org/pdf/HighSchoolSurveyPRFINAL.pdf]

  1. Capital One’s 2009 survey of high school seniors found that:
  • Two-thirds (65.4%) of the male students rated themselves as “highly knowledgeable” about personal finance compared to less than half (49.2%) of the young women who participated in the survey.
  • While the gender differences are surprising, these numbers also show a striking correlation between the students’ confidence about their financial knowledge and whether or not they had participated in a financial education class, with 45% of the male students and 61% of the female students reporting that they have never taken a personal finance class.
  • One-third of the students (33.8%) said that they were either unsure or unprepared to manage their own banking and personal finances.
    • 70% reported that they, at least occasionally, look to their parents for advice about money management and personal finance. However, only 27% said that their parents are their primary resource for financial information.

[Capital One, Capital One Survey of High School Seniors Reveals Gender Gaps in Financial Literacy, June 24, 2009, http://phx.corporate-ir.net/phoenix.zhtml?c=70667&p=irol-newsArticle&ID=1301899&highlight=]

  1. According a 2009 poll released by Junior Achievement and The Allstate Foundation:

 

  • 77% of the teens polled say that their parents are talking about the economy more than they used to.
  • 49% said their parents had discussed family finances with them as a result of the economy.
  • 14% of U.S. teens 15-17 years old report the need to contribute financially to the family budget.
  • More than 50% say they talk about the economy with their friends.
  • One third of teens (33%) surveyed said there seem to be fewer jobs available.
  • 18% of 15 -17 year olds polled said they have lost a job due the economy.
  • 53% of teens surveyed say they’re choosing activities that cost less money.
  • Nearly three-in-ten teens (29%) said that the economy is causing them anxiety.
  • 15% of teens said they have reduced extracurricular activities as a result of the economy.

[Junior Achievement and The Allstate Foundation, Teens Experiencing Layoffs, Reduced Hours, Job Scarcity and Forced Frugality According to New Junior Achievement/Allstate Foundation Poll, March 26, 2009, http://www.ja.org/about/releases/about_newsitem532.asp]

  1. A 2008 study by the Boys & Girls Clubs of America and the Charles Schwab Foundation of teens participating in the financial education program Money Matters revealed that:
  • Teens who reported learning a great deal about goal-setting were significantly more likely to also report that they had saved money for something they wanted and then purchased it (79%), compared to those who reported they learned little or nothing about goal-setting (58%).
  • Teens who reported learning about managing savings and checking accounts were more likely to report having opened both types of accounts (57% vs. 44% opened a savings account; 36% vs. 28% opened checking accounts).
  • Those who reported learning about saving money were more likely to save regularly (72% vs. 57%).
  • Teens who learned to track spending were more likely to report having developed a budget (50%) vs. those who learned little or nothing (29%) and also more likely to save money to purchase something (80% vs. 60%).
  • Youth who reported learning to create and maintain a budget were more likely to report actually developing one (50% vs. 30%).

[Boys & Girls Clubs of America and Charles Schwab Foundation, Report From Boys & Girls Clubs of America and Charles Schwab Foundation Shows Increased Knowledge Among Teens Leads to Positive Behavioral Change, January 27, 2009, http://www.businesswire.com/portal/site/schwab/index.jsp?ndmViewId=news_view&ndmConfigId=1016332&newsId=20090127005745&newsLang=en]

American Families

Saving & Investment:

1.     According to 2009 survey of investors by The Hartford:

  • 80% of investors who work with a financial advisor and who have a child or grandchild under the age of 15 are saving for college for their children and grandchildren (up from 73% in 2007). And the majority of them – 60% – are using a 529 college savings plan to save for college (up from 30% in 2007).
  • The 20% who are not yet saving for college cite saving for their own retirement as the No. 1 reason  why, followed by paying off a mortgage (25%) and paying off credit card debt (15%).

[The Hartford, Survey Results Show Upbeat Investors and Positive Saving Trends Since 2007, October 2009, http://www.hartfordinvestor.com/general_pdf/CollegeSavingsSurvey.pdf]

2.     The College Savings Foundation’s 2009 “The State of College Savings” survey of parents revealed that:

 

  • 44% of parents are “not very confident” that they will reach their college savings goals, up from 31% in 2008; while the number of parents who are “very confident” has plunged to 12% from 20% last year.
  • One-third of parents said that they are saving less for college this year than last, with 43% of those prioritizing current living expenses and 29% suffering a cut in income. Of the total parents surveyed, 41% have saved nothing at all, and 28% have saved less than $5,000 per child.
  • The number of parents expecting student loans to pay for college soared to 47% from 37% one year ago. Those expecting financial aid spiked up to 73% from 62% last year.
  • More parents are shifting the debt burden to their children: 68% versus 63% last year, with 46% expecting their kids to be responsible for up to one-third of their college debt – up from 34% in 2008.

[College Savings Foundation, “The State of College Savings” Survey Finds Parent Confidence Crashing As They Rely on Loans, Shift Debt Burden to Their Children, September 17, 2009, http://www.collegesavingsfoundation.org/pdf/CSF2009StateofCollegeSavingsPR9-17-09LOGO.pdf]

3.     According to a 2009 survey of college-going families conducted by Sallie Mae and Gallup:

  • On average, parents who save for college earmark 3.6% of annual income for their child’s education, while households earning under $50,000 set aside 7.5% of their annual income.
  • Only 29% of families are on track to reach their savings goal. The study estimates that parents would need to save an average of 5.7% of income annually to meet their self-defined goal by the time their child goes to college.
  • 529 college savings plans are gaining popularity, particularly among families with younger children. While the overall 529 usage rate for savers was 33%, parents with children under age seven are twice as likely to turn to 529 plans (43%) as parents of teens (20%). 
  • The study found that among American families, 51% received grants and scholarships, 25% of students borrowed federal loans, 12% of students borrowed private education loans, and 5% used credit cards to pay for college expenses. 58% of families paid for college last year without borrowing at all.

[Sallie Mae and Gallup, Sallie Mae and Gallup research reveals families of all incomes are saving for college yet most fall short of goals, September 17, 2009, http://www.salliemae.com/about/news_info/newsreleases/091709.htm, http://www.salliemae.com/about/news_info/newsreleases/082009.htm, http://www.salliemae.com/about/news_info/research/how_America_saves/]

 

  1. A 2009 Capital One survey of  America's "Financial IQ" revealed that:
  • Nearly half (47%) of those surveyed said they are putting less money into savings and the same number (47%) report that current economic conditions have caused them to dip into their savings to cover day-to-day expenses.
  • While a third of those surveyed (33%) said they save regularly every month, only 12% report that they are saving the recommended 10-15% of their income for the future, and another 12% said they are not saving anything at all.
  • According to the survey, the majority of Americans (59%) consider themselves to be highly knowledgeable or very knowledgeable when it comes to personal finance, a slight decrease from 64% in 2007.
  • Nearly two-thirds (63%) of those surveyed say they are extremely comfortable or very comfortable managing short-term finances but only half (54%) feel comfortable managing long-term finances.

[Capital One, America's 'Financial IQ' Survey Shows Both Understanding and Gaps, April 13, 2009, http://phx.corporate-ir.net/phoenix.zhtml?c=70667&p=irol-newsArticle&ID=1275563&highlight]

 

 

  1. Visa’s 2009 poll of consumers, 18 and older shows that:
  • 23% of those surveyed cite their parents as the primary source of funding for college tuition, room and board. This was followed by government grants (15%), government backed loans (14%), jobs (11%), and academic/sports scholarships (10%) respectively.

[Visa, Visa Survey Finds that Parents are Primary Source for College Funding, Government Grants Second, February 26, 2009, http://www.practicalmoneyskills.com/about/press/releases/022609.php]

6.     A 2008 Pew Research Center survey of  adults revealed that:

  • Three out of every four Americans say they aren't saving enough.
  • Americans now save, on average, less than 1% of their incomes, and the savings rate has been in almost continuous decline for more than two decades.
  • Fully six-in-ten adults (61%) with family incomes of $150,000 or more say they aren't saving enough money for the future. Among those earning between $100,000 and $150,000 a year, the proportion soars to 79% and stays roughly at that level among income groups farther down the scale.
  • Three-in-ten (31%) college graduates say they save enough, compared with 19% of those with just a high school degree.

[Pew Research Center, Feeling Guilty: Americans Say They Aren't Saving Enough, May 14, 2008, http://pewresearch.org/pubs/837/americans-not-saving-enough]

Debt:

  1. A new survey has found that 55% of consumers are inspired to make a more proactive effort to avoid incurring any or more credit card debt. This has influenced changes in consumer behavior toward holiday credit card debt with 21% expecting to have credit card debt after January 2010 from the 2009 holiday season, a 5% decrease from the year ago period. 69% of those becoming more proactive to reducing credit card debt cited higher credit card interest rates as a reason for their proactivity while 38% included the proliferation of information about the impact of carrying credit card debt and 37% cited the potential damage to their credit score.

[CardTrak.com, Card Cutback, December 15, 2009, http://www.cardtrak.com/news/2009/12/15/card_cutback]

  1. Consumer credit continued its decline as Americans cut another $7 billion off October, bringing the year-to-date total reduction to $69 billion. Posting its 14th consecutive monthly decline, U.S. consumer revolving credit remained well below $900 billion in October. Since peaking at a revised $975.2 billion in the third quarter of last year, Americans have chopped-off more than $97 billion in revolving credit to-date. At the end of October, Americans were $2483 billion in debt, excluding home mortgages.

[CardTrak.com, Oct Debt, December 9, 2009, http://www.cardtrak.com/news/2009/12/09/oct_debt]

Bankruptcies, Defaults, & Foreclosures:

  1. After cooling-off in November bankruptcy filings resumed an upward trend, rising 33% year-on-year in December. Overall consumer filing total for the 2009 calendar year topped 1.4 million, compared to the 1.1 million total consumer filings recorded during 2008. There were 113,274 consumer filings in December, according to the American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center. Chapter 13 filings constituted 28% of all consumer cases in November, unchanged from the October rate.

[CardTrak.com, Bankruptcy, January 11, 2010, http://www.cardtrak.com/news/2010/01/11/bankruptcy]

 

Updated April 2010