Think You Know About Personal Finance? Well, You’re Half Right
We all like to think we’re good with money, right?
Maybe we’re not as good as we think we are.
Americans can answer money management questions correctly less than half the time, according to a new report from the TIAA Institute and the Global Financial Literacy Excellence Center at George Washington University’s School of Business.
They polled more than 1,000 people, asking nearly 30 questions about borrowing, earning and saving. On average, people got the answers right 49% of the time.
Here are a couple of highlights:
- People knew the most about borrowing money. They got those questions right 61% of the time. Apparently a lot of us have done our research on that subject.
- People knew the least about comprehending risk, insurance and investing. Those things are complicated. People got those questions right 39%, 44% and 46% of the time, respectively.
- Poll respondents who got the highest scores were more likely to know how much they really need to retire, have an emergency fund and have investment accounts other than those for retirement.
- Nearly 25% of the respondents were carrying credit card debt from month to month.
And here’s something really interesting: People who know more about personal finance are more likely to seek out help, said report co-author Annamaria Lusardi, a professor of economics at George Washington University.
In other words, they know what they don’t know.
“When it comes to personal finance, people have to be proactive,” Lusardi told CNBC.
Here’s what we glean from all this: Almost no one knows everything about money. It’s never too late to educate yourself further.
Here are a few good starting points:
Bottom line: We could all know more about money. If you’re reading The Penny Hoarder, at least you’re on the right track.
Your Turn: How much do you think you know about money management?
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He knows a lot about money, mainly because of mistakes he’s made.