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Survey: Americans Struggle with Financial Literacy

Only about one in three Americans was able to pass a financial literacy test, according to a new study. (Chris Epper/flickr)
Only about one in three Americans was able to pass a financial literacy test, according to a new study. (Chris Epper/flickr)
August 3, 2016

SPOKANE, Wash. — Nearly two-thirds of Americans were unable to pass a financial literacy test, a new survey shows. People tend to struggle with concepts such as budgeting, credit and long-term decision making when it comes to money.

Traci McGlathery of the Spokane Teachers Credit Union, which provides financial education classes, said credit unions are looking to fill that gap. She said emotions are a big part of personal finances and that people often open up after these classes about their struggles.

"And that's where we really get to peel back the layers and understand that, yeah it is a tough conversation and something that is frightening to many to have to deal with,” McGlathery said. "It's very stressful."

Last year, STCU reached 7,700 people through its educational services.

According to McGlathery, purchases are driven by emotion 70 to 80 percent of the time, but budgeting can help remove emotion from spending so that people make decisions that serve them best in the long run.

Financial education is especially important for young people as they plan for the future, she said. For instance, getting a college degree can greatly increase earnings during a person's lifetime.

"Just last week we had a young woman who told her aunt, 'Wow, I really do need to consider college. I didn't think I needed to go to college, but college is going to help me long-term. I'm going to earn more,’” McGlathery said.

McGlathery suggested that making a "needs versus wants" assessment as part of budgeting can keep people from spending too much and sinking under the weight of debt.

According to the National Youth Involvement Board, credit unions have reached a half-million students with financial education over the past year.

Eric Tegethoff, Public News Service - WA