Basic financial skills are generally not taught in a classroom in the United States. As a result, the lack of financial education has led to Americans having inadequate household and retirement savings and high levels of credit card and student loan debt.
As of 2020, 21 states now require financial literacy to be taught in high school, and 25 states require a high school economics course. Poor money management skills beget decisions made in haste, desperation, and anxiety, leading to more debt, creating more stress-induced decision making, and so on.
Every few years, the Financial Industry Regulatory Authority (FINRA) issues a five-question test as part of its National Financial Capability Study, which measures consumers’ knowledge about interest, compounding, inflation, diversification, and bond prices. On the most recent test, only 34% of those who took it got all five questions correct, which suggests that the basic economic and financial principles that underpin these problems are widespread.
To see an example of the five-question quiz, and if your state is one of the 21 requiring the teaching of financial literacy (hint: our home state of Pennsylvania is NOT one of them), check out this Investopedia article.