Americans Given A 'D' For Financial Knowledge
For the second consecutive year, Americans were given a "D" by Bankrate.com in its Financial Literacy Survey. The company described Americans as in "debt denial" and as being generally unwilling to admit credit is a problem.
The survey of 1,000 Americans is based on 12 concepts of financial fitness. Among the findings:
* The public is more aware of what they should do to achieve financial fitness. The percentage of survey respondents saying an activity is "very important" increased in 11 of the 12 financial fitness concepts.
* A substantial gap exists between awareness and follow through. While 71% say keeping an emergency fund is "very important," only 44% say they always have one available-a gap of 27 points. Bankrate.com said the gap was larger for preparing a will, and shopping for the best insurance rates.
* Financially literate people share these things in common: They're older, have a higher household income, and are married. Higher education and gender don't seem to affect literacy scores, the company said.
* While most said they are good at handling money and paying credit cards in full each month, three out of four also said they're concerned about their ability to pay credit card bills each month. And they would rather reveal almost any other detail of their personal lives than admit how much they owe.
* Financial literacy pays off. Those who are financially literate will save more than $30,000 over the life of a mortgage loan and make higher salaries than those who aren't financially literate.
The 12 concepts of financial fitness tested are: paying bills on time; reading bank account statements regularly; making more than minimum credit card payments; preparing a will; contributing to a retirement account; comparison shopping for a mortgage; keeping an emergency fund of at least three months' living expenses; shopping around for the best insurance rates and terms; following a monthly budget; adjusting one's W-4 form annually; checking one's credit report annually for accuracy; and looking for and switching to lower-rate credit cards.