Sep 22, 2015

This Question Should Be Eliminated From All Financial Literacy Surveys

Yes, we have all seen the results from this specific question touted in all forms of marketing collateral for personal finance curricula.  It usually sounds something like this “98% of students who completed our program felt more CONFIDENT about their personal finance skills/knowledge/etc.” Unfortunately, confidence doesn’t always translate in the real world to responsible financial habits and there is a recent AICPA survey to prove that:

A newly released survey from the AICPA found that college students who rated themselves as having “excellent” or “good” personal financial management skills (57 percent) outweighed those who rated their skills as poor or terrible (12 percent) by a more than a five-to-one margin.

However, almost half of college students (48 percent) reported having less than $100 in their bank account at some point in the last year. In addition, thirty-eight percent said that they had borrowed money from friends or family in the last year and more than one-in-ten (11 percent) missed a bill payment.

The survey, which was conducted online among 751 college students who will be enrolled in fall of 2015, on behalf of the American Institute of CPAs by Harris Poll in August, highlights the differences between students’ perception of their financial literacy skills and the reality.

So, the next time a students says they are confident about their financial skills, ask them to prove it!

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Here’s a recent blog post with an activity idea you can use in your classroom to demonstrate this overconfidence problem.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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