Are you smarter about money than most Americans?

Are you smarter about money than most Americans?


A better economy does not make a smarter consumer.

As Americans’ finances recovered from the Great Recession – spurred by the longest bull market, 50-year unemployment lows and an almost record-breaking expansion – they got dumber about money matters. 

Just 34% could answer four out of five financial literacy questions correctly last year, down from 42% in 2009, according to the 2018 Financial Capability Study from FINRA Investor Education Foundation, a nonprofit dedicated to financial education and empowerment. The figure was down from the 2012 and 2015 studies as well.

The money topics with the biggest drops in comprehension were inflation, risk and interest rates. But the share of right answers to all five questions fell since 2009.

Potential reasons for the declines? Many adults haven’t lived through cycles of higher and lower interest rates, or swings in inflation, which affect their mortgages, credit cards and yields in savings.

Little understood money topics

The share of Americans who got the test’s inflation question right dropped 10 percentage points to 55% from 2009. Similarly, 43% answered a question about risk accurately, down from 53% in 2009.

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When it came to interest rates, 72% answered correctly, down from 78% in 2009. But that question – and the one about mortgages – had the highest share of correct responses overall. In 2018, 73% of Americans got the mortgage question right, according to the study. That’s compared with 76% in 2009.

The least understood concept was bond prices. Only 26% of respondents got that question right; 37% got it wrong, while 36% answered: “Don’t Know.”

Want to test your money knowledge? Take the test here

Who’s dumber about money?

Younger and middle-aged adults led the declines.

The share of 18- to 34-year-olds who answered four of the five questions correctly fell by nearly half in the last nine years, going from 30% in 2009 to 17% in 2018. The decline was 45% to 33% for 35- to 54-year-olds. Only those 55 and over showed a modest drop from 51% nearly a decade ago to 48% today.

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One reason may be exposure, says Gerri Walsh, president of the FINRA Foundation.

Younger people have lived much of their adult lives in a low interest-rate and low-inflation environment, unlike Baby Boomers who can remember the early 1980s when the effective federal funds rate hit 19%. The rate – a benchmark to set interest rates on consumer loans and a tool to fight inflation – is now at 2.4% and was effectively zero from 2009 to 2015.

“These concepts are not relevant to everyday life to those 35 and under where most of the declines are happening,” Walsh says.

Unfortunately, most Americans are also unaware of what they don’t know, the study found. Seven in 10 gave themselves high marks when it came to financial knowledge, even though only a third answered four of the five questions right.

“That’s why we encourage everyone to take the quiz to see how they stack up,” Walsh says. “And then they can turn to other resources if they need to learn more about money.”



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