What’s the cost of financial ignorance? Money literacy for teens

There’s a direct correlation between rich countries, and their citizens being financially savvy. 

At an individual level, US academic studies suggest that up to 40% of wealth inequality in retirement is attributable to differences in financial knowledge.

The Catch-22 is that if you start out poor in life, your chances of becoming financially literate - and wealthier because of it - are not great. 

The OECD ran a test of 15-year-olds around the world in order to test their financial knowledge, skills and attitudes. 

Not surprisingly, the teenagers of rich countries including the US, Australia, Canada and Finland had higher-than-average money literacy. Teens in poorer countries including Indonesia, Peru and Georgia had less knowledge and skills. 

Citizens of rich countries are more likely to have bank accounts, which helps them get to grips with financial concepts. 

And because more is spent on their education, they’re likely to have better numeracy and writing skills - which are crucial for financial literacy.

Some countries of middling wealth, such as Estonia, are aware of the importance of teaching money matters. Their education of teens is among the best, and includes a “national money month” of lessons, and courses given to teachers. 

Bottom line: Parents know the best gifts they can give is knowledge about money and finance. Countries are realizing the benefits of adding financial literacy to the school curriculum. How to save, invest, and avoid debt should be foundational to learning, not a nice add-on.