Most millennials can’t answer simple financial questions correctly, according to a new nationwide survey. Only 17 percent of working Americans ages 25-40 could answer five basic financial literacy questions from Massachusetts Mutual Life Insurance Co. (MassMutual) Foundation’s FutureSmart Digital program correctly, according to the report. The questions were on topics including credit scores, compound interest and investing.
A major lack of financial education appears to be taking a toll on American’s financial health. 55% of people said they don’t feel they have the financial knowledge to properly manage their finances, according to research from MassMutual.
Preparing students with financial knowledge can help build healthy financial habits. Most parents (72 percent) who had a child who graduated college in the past year said they wish they taught their child more about finances, according to a MassMutual poll conducted by PSB online.
Applications like Piiggy will seemingly be very helpful.
Specific findings of the 2018 MassMutual Financial Literacy survey:
- 1) When deciding how to invest your money, which of the following is LEAST important to know?
o Whether or not deposits can be made online; *51 percent answered correctly
o When you will need to use the money
o How risky the investment is
o The expected rate of return on your investment
o Don’t know - 2) What factor has the biggest impact on a credit score?
o Your history of making payments on time; *52 percent answered correctly
o The amount of money you owe on your credit cards
o The number of years that you have used credit responsibly
o Having a variety of types of credit
o Don’t know - 3) If you opened a new savings account, which of the following accounts will grow your money the most?
o Account 1: Interest rate 2%, interest compounded daily; *55 percent answered correctly
o Account 3: Interest rate 2%, interest compounded monthly
o Account 2: Interest rate 1%, interest compounded daily
o Account 4: Interest rate 1%, interest compounded annually
o Don’t know - 4) What is the best strategy to avoid paying interest on your credit cards?
o Pay the full balance each month; *78 percent answered correctly
o Pay the minimum balance each month
o Make payments online
o Have credit cards from two different banks
o Don’t know - 5) Which one of these is NOT a successful budgeting strategy?
o Pay with a credit card if you have a hard time sticking to a budget; *79 percent answered correctly
o Keep some extra money in your budget for emergencies
o Revisit your budget regularly and make adjustments
o Think about which items are your most important needs
o Don’t know
Methodology
PSB conducted the MassMutual Financial Literacy Omnibus survey on behalf of MassMutual. The survey was conducted May 2018 via an online survey among 500 Americans age 25-40.
About MassMutual
MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policy owners. MassMutual offers a wide range of financial products and services, including life insurance, disability income insurance, long term care insurance, annuities, retirement plans and other employee benefits. For more information, visit www.massmutual.com.
What do you think? Comment your thoughts below!
Comments