Friday, April 11, 2008

Students Lack Knowledge of Basic Finances

High School students knowledge of financial literacy is on the decline as schools are failing to teach the most basic financial knowledge a students needs to succeed.

High school seniors, on average, answered correctly only 48.3 percent of questions about personal finance and economics, according to a nationwide survey released Wednesday by the Federal Reserve. That was even lower than the 52.4 percent in the previous survey in 2006 and marked the worst score out of the six surveys conducted so far.

With home foreclosures at record highs, Fed Chairman Ben Bernanke stressed in a speech that young people must sharpen their financial knowledge so they are in a better position to make sound investment decisions throughout their lives.

"The financial preparedness of our nation's youth is essential to their well-being and of vital importance to our economic future," Bernanke said at the Fed event on financial literacy.

"In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace," the Fed chairman added.

It is amazing that a student can graduate high school and not know how to balance a check or to even understand that concept of interest.

Fortunately, there is an easy solution. Students are required to take a one semester course in American Government (which is great), but then the other semester they should be taking a course to learn basic financial information.

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