FAQs
The U.S. FLEC highlights five principles as the building blocks of financial literacy, known as the MyMoney Five.
- EARN.
- SPEND.
- SAVE & INVEST.
- BORROW.
- PROTECT.
What is the financial literacy rate in 2024? ›
U.S. adults correctly answered only 48% of the 28 index questions in 2024, on average. This figure has hovered around the 50% mark since the inaugural 2017 survey. Comprehending risk has consistently been the area of lowest functional knowledge.
What is a good financial literacy score? ›
According to the FICO website, a score in the range of 670–739 would mean you're around the average of all U.S. consumers. Anything at this level or above is considered a good score, but scores above 740 are considered “very good” and would be even more attractive to lenders.
What are the top 3 financially literate countries? ›
information to policy makers, regulators, the private sector, and academics • The S&P Global FinLit Survey is the largest, most comprehensive measure of financial literacy. Norway, Denmark, and Sweden lead the world with 71% of adults answering three out of four topics correctly.
What are the three C's in financial literacy? ›
Students classify those characteristics based on the three C's of credit (capacity, character, and collateral), assess the riskiness of lending to that individual based on these characteristics, and then decide whether or not to approve or deny the loan request.
What are the 5 pillars of financial literacy? ›
It's not about earning a certain amount of money or having a specific figure saved; it's about your knowledge and comfort with the financial system. Financial literacy has five components: earn, spend, save and invest, borrow, and protect.
What percentage of UK is financial literate? ›
The 2015 survey concluded that the average score of an adult with regard to managing money well day-to-day was 59%, with subgroups scoring as low as 41%. But for planning ahead, the average score was 40%, dipping as low as 18% for one subgroup.
How many adults don t know financial literacy? ›
Only 57% of adults in the United States are financially literate. Missouri, Utah and Virginia boast the best financial literacy rates, while Alaska, Washington, D.C. and South Dakota have the worst financial literacy rates.
What are the P FIN index questions? ›
The index is based on responses to 28 questions across eight functional areas: earning, consuming, saving, investing, borrowing/managing debt, insuring, comprehending risk, and go-to information sources.
What is the 50 30 20 rule for financial literacy? ›
Key Takeaways. The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.
Table 1 The “Big Three” financial literacy questions
- Suppose you had $100 in a savings account and the interest rate was 2% per year. ...
- Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. ...
- Please tell me whether this statement is true or false.
How to test your financial literacy? ›
Take the National Financial Capability Test
This 30-question test measures knowledge of financial literacy and income generation (career & entrepreneurship). This test has broader questions that measure participants' ability to earn money and manage their personal finances.
Which country has the poorest literacy rate? ›
State of Literacy Around the World
Burkina Faso (38%), Niger (19%) and South Sudan (32%) are the countries with the lowest literacy (CIA World Factbook). In 1820, only 12% of people globally could read and write; however, in 2016, only 14% of people globally remained illiterate.
How to measure level of financial literacy? ›
The Standard & Poor's Ratings Services Global Financial Literacy Survey is the world's largest, most comprehensive global measurement of financial literacy. It probes knowledge of four basic financial concepts: risk diversification, inflation, numeracy, and interest compounding.
What percentage of the world is financially illiterate? ›
Based on this definition, 33 percent of adults worldwide are financially literate. This means that around 3.5 billion adults globally, most of them in developing economies, lack an understanding of basic financial concepts.
What are the 5 steps of financial literacy? ›
The 5 components of financial literacy. There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.
What are the 5 essential components of literacy? ›
The National Reading Panel identified five key concepts at the core of every effective reading instruction program: Phonemic Awareness, Phonics, Fluency, Vocabulary, and Comprehension.
What are the 5 five components of information literacy? ›
What is information literacy? The term "information literacy" describes a set of abilities that enables an individual to acquire, evaluate, and use information. You can think of information literacy as having five components: identify, find, evaluate, apply, and acknowledge sources of information.
What are the five foundations of financial literacy? ›
This article will explore the five basic principles of financial literacy: earn, save & invest, protect, spend, and borrow, providing you with actionable insights to enhance your financial knowledge and make the most of your resources.