Financial Literacy – Evidence of Lack of Knowledge with Policy Suggestions

Financial literacy is of ever-increasing importance. Using FINRA data of bi-annual surveys of U.S. residents in all 50 states, we test knowledge of basic financial literacy concepts such as inflation, compound interest, diversification, retirement savings for those that self-identify with high financial knowledge. Separately, we examine those required to take a course in financial education. We find gaps in basic financial knowledge when measuring the population with some financial education. With more retirees and fewer workers to fund government programs, the large increase in national debt with the global pandemic, it is crucial that individuals have a solid understanding of their finances; else, there is a concern for substantial loss of wealth and less government support in investor's later years. We present data and arguments for a national standard in financial education, essentially a national curriculum recommended for basic financial education.