To: Fast Facts List

Fast Facts: THE FINANCIAL LITERACY GAP

The single most important issue for individual Americans to act on today is making better choices about managing money, according a survey of young adults. FACT: 41% of U.S. adults, or more than 92 million people living in America, gave themselves a grade of C, D, or F on their knowledge of personal finance. FACT: According to a 2011 Allstate/Heartland Monitor Poll, 30% of people are not sure how to use insurance to protect themselves from unseen risks.1 FACT: The financial literacy gap is especially acute among young adults. Many young adults report that they dont feel adequately prepared to make good financial choices when it comes to using debt wisely (28%), saving for the future (40%), or investing their money (43%). FACT: Nearly 50% of teens are unsure of how to use a credit card effectively, yet 24% think high school or younger is when they should get their first credit card. FACT: 44% of parents admit to needing more guidance on how to best teach their children the skills necessary to become financially responsible and successful adults. FACT: The U.S. Department of Treasury sponsors a National Financial Capability Challenge for students online. In 2011, 84,372 students took the online test. The national average score was 69%. Interested in knowing how your literacy stacks up? The test is only available for students, but sample questions are attached. Answers will be included in next weeks Fast Facts. Financial literacy is about more than basic banking. It is about retirement savings, insurance, student loans, helping the underbanked, serving the military, and more. The Financial Services Roundtable keeps track of the various financial literacy efforts of member companies in each of these categories. Contact Judy Chapa, VP of Financial Literacy, at judy@fsround.org for more information. Financial Services HOTLINE: If you have questions about this topic or any other issue facing financial services, please reach out to Abby directly at 202-589-2531 or abbyresearch@fsround.org. Learn more about the Financial Services Industry at www.OurFinancialFuture.com. OurFinancialFuture.com is continuously updated to bring you the most useful information about the industry in real-time.

(The next Allstate poll about financial literacy is scheduled to be released on April 9 th).

How does your Financial Literacy stack up?

Sample Questions from the U.S. Treasurys Financial Capacity Challenge for students

1. Sara works full-time at the Big Save store and earns $2,500 per month. Who pays the contributions to Social Security on the $2,500 per month in wages she earns? A. Only Sara. B. Only Big Save, her employer. C. Both Sara and Big Save, her employer. D. I don't know. 2. Carolina has $5,000 saved up from working at different jobs. She puts her money in a savings account that pays 4 percent a year in interest. How much money will be in her account at the end of the first year and at the end of the second year? A. End of first year: $5,100; end of second year: $5,400. B. End of first year: $5,200; end of second year: $5,400. C. End of first year: $5,200; end of second year: $5,408. D. I don't know. 3. Marco went to the grocery store to buy a box of cereal. The type of cereal he liked came in three different brands and three different size boxes. To select the brand and the box with the lowest unit cost, he should look at the: A. Largest cereal box on the shelf. B. Price per ounce of cereal in each box. C. Most popular brand of cereal. D. I don't know. 4. Which one of the following best describes the relationship between the interest rate charged to a person for a loan and that person's risk of nonpayment of the loan? A. Lower interest rates are charged on loans with a lower risk of nonpayment. B. Higher interest rates are charged on loans with a lower risk of nonpayment. C. Lower interest rates are charged on loan with a higher risk of nonpayment. D. I don't know. 5. John drove his car to the local Gas and Shop store. On the way to the store he got distracted while talking to his friend in the car and hit a street sign. Neither he nor his friend was hurt in the accident, but the front end of the car was damaged. What type of automobile insurance coverage will provide reimbursement for damages to his car? A. B. C. D. liability. collision. comprehensive. I don't know.
(Answers will be included in next weeks Fast Facts)