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How Financially Smart Are Americans?

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The United States may consider itself best in a lot of areas, but when it comes to financial literacy it falls short.

Of more than 140 countries surveyed in a global financial literacy survey by Standard & Poor’s Ratings Services, the United States ranks 14th.

S&P gave a five-question quiz to to more than 150,000 adults in 148 countries, looking at four basic financial concepts: numeracy, interest compounding, inflation, and risk diversification. Those who correctly answered questions on at least three of those concepts were deemed financially literate.

According to the study, the U.S. – with a financial literacy rate of 57% – trails behind countries such as Germany (66%), Israel (68%), the United Kingdom (67%) and Norway (71%).

Within the G7 group of countries (Canada, France, Germany, United Kingdom, Italy, Japan, and the United States), financial literacy varies enormously – from a low of 37% in Italy to a high of 68% in Canada.

The survey finds that the United States shows different levels of financial literacy according to gender, income and education.

Americans with less education and lower incomes have lower financial literacy levels than their counterparts in other wealthy countries.

According to the survey, 47% of U.S. adults living in poorer households are financially literate. Countries that are doing much better include Denmark (65%), Sweden (64%), the U.K. (63%) and Canada (61%).

While half of U.S. adults with a secondary education are financially literate, about two-thirds of adults in Germany, Canada and the U.K. are financially literate.

Regarding gender, the survey shows that in almost every country there is a gap between men and women, but it’s a little bit worse in the U.S.

Worldwide, the survey finds a five-point gender gap, with 35% of men being financially literate compared with 30% of women.

That gap doubles in the U.S. According to the survey, 62% of men in the U.S. are financially literate, compared with 52% of women.

The survey found the world’s largest gender gaps were around 15 percentage points and happened in countries like Canada, Indonesia, Nepal, Italy and the Netherlands.

Notably, in China and South Africa, there was no gender gap.

“This data clearly shows we need to step up the effort to improve financial literacy around the world,” said Annamaria Lusardi, the academic director of George Washington University’s Global Financial Literacy Education Center, in a statement. “And we need to focus on some vulnerable groups, such as women and the young.”

Compound interest is the least understood topic in the U.S., with 40% of adults answering the interest question incorrectly.

This is despite the fact that Americans’ credit card use is among the highest in the world, according to the World Bank Global Findex database. In the U.S., about 60% of adults have a credit card.

There is also a significant gender gap in Americans’ understanding of compound interest. According to the survey, 62% of U.S. women have a credit card, yet only half of them correctly answer the interest topic. Meanwhile, 59% of U.S. men have a credit card but two-thirds of them correctly answer the interest topic.

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