Report Says Many Teens Lack Financial Literacy

iStock/Thinkstock(PARIS) — Today’s teenagers may be tech savvy, but a new survey finds many of them to be financially illiterate.

According to a new report by the Paris-based Organization for Economic Cooperation and Development, just one in 10 teenagers around the world is able to make some key but complex financial decisions, including understanding invoices and pay slips and deciding the options of various loans.

Approximately 29,000 15-year-old students in 18 countries were tested on math, reading, science and problem solving.

In the U.S., only 9.4 percent of teens quizzed could answer the most challenging questions on the 2012 international test.

The easiest questions required teens to display basic financial literacy skills, such as understanding the purpose of an invoice or comparing prices per unit to decide the better value.

The most difficult question asked students to analyze two loan proposals with differing rates and terms and choose the better offer.

Teens in Shanghai, China, had the highest average score: 603 points. Colombia was at the bottom of the list with a score of 379. The U.S. had an average score of 492, which ranks our teens right in the middle of the pack, between teens in Latvia and Russia.

U.S. Education Secretary Arne Duncan reacted to the study by telling reporters Wednesday that average isn’t “good enough.”

Duncan said our economy is changing and young people need to have a “level of financial literacy that 20 or 30, 40 years ago, maybe wasn’t applied. But today it’s an absolute necessity.”
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