Teens Get Subpar Grade on Financial Literacy from OECD

In a world chock-full of finfluencers and fintechs, nearly a fifth of teenagers in advanced economies lack the baseline financial literacy and math chops to make simple everyday money decisions, according to a new report by the Organisation for Economic Co-operation and Development (OECD).

Digital Chops, Financial Flops

Every three years, the OECD conducts its Programme for International Student Assessment of 15-year-old students. Its financial literacy survey is a subset of this, and looks at 20 countries including the US, the Netherlands, Canada, Norway, and Brazil. What this year’s survey revealed is that, while an overwhelming majority of students are using financial products, a troubling number lack basic knowledge to make sound financial decisions:

• According to the survey, which was conducted in 2022 and released Thursday, 63% of 15-year-old students have a bank account, 62% have a payment or debit card, and 86% bought something online in the 12 months prior. Meanwhile, just 11% were considered “top performers,” meaning they could solve complex financial problems, an increase of just 0.5% from the previous survey, and 18% were considered “low performers,” meaning they lacked fundamental skills like division to assess financial questions — a significant increase from the 15% in the previous survey.
• “These results, combined with the increased incidence, complexity and potential impacts of financial frauds and scams, highlight the need to better equip our young people with the knowledge and skills necessary to make safe and informed financial decisions,” OECD Secretary-General Mathias Cormann said at a press conference.

We’re No. 4! The US outperformed the OECD’s 11% average, with nearly 14% of 15-year-old students considered top performers. This trailed only the Netherlands, Belgium, and Canada. And the number of US students who were low performers came in around 17%, just below the 18% survey average. 

Mom and Pop Shop: If it’s not obvious, students with better financial literacy skills save more money and choose products more responsibly, such as by comparing prices. Cringe as it might be for someone just discovering The Smiths or mired in some other inward-looking adolescent rite of passage, the best way to learn these skills may be talking to their parents. Students who discussed money plans with their parents — 64% said they did at least once a month — were much more financially literate than those who didn’t.