Why Americans Are Failing the Grade at Financial Literacy

Summary

The video from Two Cents addresses the alarming state of financial literacy in the U.S., highlighting statistics on household budgets, emergency funds, and student debt. It points out the lack of formal financial education in schools and the predatory practices of the financial industry targeting the uninformed. The video suggests learning from Scandinavian models, advocating for financial education starting from an early age, and encourages viewers to take charge of their financial education through various free resources, emphasizing the collective responsibility in improving financial literacy.

Takeaways

• 🌟 The United States has a high ranking in the global economy and worker salaries, yet financial literacy is alarmingly low.
• 📉 The S&P Global Financial Literacy Survey ranked the U.S. 14th, reflecting widespread financial illiteracy among Americans.
• 💔 A significant portion of U.S. households do not budget, struggle with emergency funds, and have debt issues.
• 🎓 The average college student is burdened with substantial student loans and credit card debt.
• 👵 The median retirement savings for Americans aged 55-64 is insufficient for a comfortable retirement.
• 📚 Millennials, despite high self-assessment of financial knowledge, demonstrate a lack of basic financial literacy.
• 🏫 The lack of formal financial education in schools is a major contributor to financial illiteracy.
• 💳 Credit card companies target financially inexperienced individuals with high-interest offers.
• 💼 Financial institutions spend significantly more on marketing than on consumer financial education.
• 🇸🇪 Scandinavian countries excel in financial literacy due to cultural traditions, stable financial markets, and comprehensive education.
• 📈 Kids in Sweden learn about personal finance from the first grade, contributing to their high financial literacy.
• 🗳️ Advocating for quality financial education in schools and engaging with state representatives can help improve financial literacy.
• 👨‍👩‍👧 Parents can significantly influence children's financial education without being experts, such as by opening bank accounts for them.
• 📚 Free or low-cost resources, such as blogs, podcasts, and courses, are available for adults to improve their financial literacy.
• 🤝 The Two Cents channel is launching a Patreon to support their mission of financial education, offering exclusive content and community engagement.

Q & A

What is the main issue discussed in the video?

The main issue discussed in the video is the crisis levels of financial literacy in the United States and the need for improved financial education.

What was the outcome of the 2015 S&P Global Financial Literacy Survey regarding the U.S.?

The 2015 S&P Global Financial Literacy Survey ranked the U.S. 14th in financial know-how among the participating countries.

What percentage of U.S. households do not keep a budget?

Nearly 60% of U.S. households do not keep a budget.

How much money would two thirds of Americans be unable to come up with for an emergency?

Two thirds of Americans would be unable to come up with $1,000 for an emergency.

What is the average student loan debt carried by college students in the U.S.?

The average college student in the U.S. carries $30,000 in student loans.

What is the median retirement savings for Americans aged 55-64?

The median retirement savings for Americans aged 55-64 is around $100,000.

What is the primary reason for the lack of financial education in schools according to the video?

The primary reason for the lack of financial education in schools is that it is not mandated in most states, with only a third offering it and only five states requiring a semester-long course focused on personal finance.

How does the video suggest that financial institutions target young people after high school graduation?

The video suggests that financial institutions target young people by luring them into high-interest credit cards with offers of small incentives, despite most students having little to no income and no real-world financial experience.

What is the ratio of money spent by the financial industry on consumer education versus marketing their products, according to the 2013 Consumer Financial Protection Bureau report mentioned in the video?

According to the 2013 Consumer Financial Protection Bureau report, the financial industry spent $670 million on consumer education compared to $17 billion on marketing their products, resulting in a ratio of 25 to 1.

What are some of the reasons for the high financial literacy scores in Scandinavian countries as mentioned in the video?

The high financial literacy scores in Scandinavian countries like Denmark, Norway, and Sweden are attributed to a long cultural tradition of saving, the presence of strong government agencies to regulate the financial services industry, and the integration of personal finance education starting from the first grade through high school.

How does the video suggest parents can teach their children about money without being experts?

The video suggests that parents can teach their children about money by getting them their own bank account, which has been shown to improve financial literacy, and by involving them in everyday financial tasks such as paying bills online.

What is the purpose of starting a Patreon as mentioned in the video?

The purpose of starting a Patreon is to provide supporters with an intimate look behind the scenes, a community space for discussion, and digital hangouts with the creators, while also funding the production of high-quality, professional financial education content free from 'for-profit' agendas.