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Probably the most and least financially literate international locations of 2020

Financial literacy is the ability to understand and use money skills to maintain your personal finances. This is mainly true for simple money skills that the everyday person uses, like building one Food budget and save for a rainy day and retirement.

Our first experiences with money usually begin when we receive our first allowance or birthday present in cash. Most of us likely relate to saving up on mowing lawns or some other simple endeavor to buy the latest video game. Then we go to the store, grab the game, and head to the checkout where we learn about sales tax because our exact amount of $ 59.99 wasn't enough.

Depending on which state you are in, you've likely learned a little more about budgeting, taxes, and choosing a credit card with a low APR in economics or personal finance. For many others, your school may not have needed or even offered these opportunities, so you leave it to Google. "how to budget”To advance your financial education yourself.

Financial literacy is at the core of healthy money management and a bright financial future. It starts with what you learn as a child and in school. This sets the tone for how you budget and save. For this reason, we want to find out which countries are the most financially educated and which have something to learn.

We analyzed which states needed economic and personal finance education in high school and compared median household income to average household debt to determine which states were most financially literate.

Most financially literate states

Not only do these states value financial literacy more than most, but they also have relatively low levels of debt compared to their average salary and enjoy overall stable financial well-being. Michigan, Arizona, Virginia and Tennessee top the mark when it comes to financial literacy.

Average individual debt in the financially best-educated countries

1. Michigan

Michigan has the second highest financial education requirements – it offers both economics and personal finance courses and tests students on both subjects. The state of the Great Lakes also ranks 13th in the lowest debt ratio with an average household debt of $ 37,510 versus an average income of $ 56,697. Michigan has the highest financial prosperity rating of any state 51This means that more than half of the population has automatic savings and 32 percent always pay off their credit cards in full.

Financial prosperity rating of 51
13th place for debt to income ratio
Business tests and personal finance

2. Arizona

Although Arizona outperforms Michigan with the fourth lowest debt-to-income ratio, the lowest on our list, there is a huge gap in the state's educational needs. Both economics and personal finance must be offered in Arizona, but only economics must be considered part of their core curriculum.

Financial prosperity rating of 49
4th place for debt to income ratio
Requires only a business course and no exam

3. Virginia

Virginia is known as the birthplace of the nation and also holds the title of the third largest financially literate state. Both Virginia and Tennessee offer personal finance and economics courses and require that they be taken in high school. However, they are also not included in their standardized testing process. Virginia has $ 17,262 more average debt than Michigan in a year.

Financial prosperity rating of 49
14th place for debt to income ratio
Requires both personal finance and business courses, but no tests

4. Tennessee

While Tennessee brings home the 10th lowest salary in the US, the data shows they manage their money pretty well. Despite making little more than $ 52,000, they have the 19th lowest debt to income ratio with an average debt of $ 39,240. They also have a financial wealth ranking of 49, which means the majority of Tennesseeans have at least a few hundred dollars in savings, but they are having a bit of a hard time making ends meet.

Financial prosperity rating of 49
19th place for debt to income ratio
Requires both personal finance and business courses, but no tests

Least financially literate countries

Not only do these four states have lower financial literacy requirements than others, but they may find it harder to pay their bills. They are also more likely to have a disproportionate amount of debt, provided they spend the recommended amounts 36 percent on their income, which repays their loans and credit cards. Vermont, Montana, Washington, and West Virginia may need to dig into their books to improve their financial literacy.

Average deleveraging by individuals in the least financially savvy states

1. Vermont

Vermont ranks last in our study with the fourth highest debt ratio of $ 62,760, compared with a median household income of $ 60,782 and an expected annual debt repayment of $ 21,882. Additionally, Vermont has no educational requirements. In fact, high schools don't have to offer economics or personal finance courses at all.

Financial prosperity rating of 46
47th place for debt to income ratio
Courses do not have to be offered

2. Montana

Montana is the only state in our lower four states that has expectations of a high school course, although high schools are only required to offer a personal finance course. The Treasury also ranks 29th in terms of debt-to-income ratio. After repaying $ 19,917 annually based on a median income of $ 55,326, that leaves $ 23,652 in debt.

Financial prosperity rating of 47
29th place for debt to income ratio
Courses do not have to be offered

3. Washington

Washington state has the fifth highest debt per household in the US and the highest at $ 63,680. At $ 74,073 a year, they make quite a bit more than many other states, but that's not enough to save them from the 11th highest debt-to-income ratio in our study – especially when you consider that they don't have any Have financial education in their curriculum.

Financial prosperity rating of 48
42nd place for debt to income ratio
Courses do not have to be offered

4. West Virginia

West Virginia has the lowest median income on our list, making just over $ 44,000 a year. Their average debt is not far behind at $ 39,290 per household. That's enough for them to rank Montana just ahead of Montana in terms of debt-to-income ratio and rank 27th overall. However, you are bound for the lowest Financial Wealth Score of 46 and have no financial literacy requirements.

Financial prosperity rating of 46
27th place for debt to income ratio
Personal finance must be offered

Financial educational resources

It's never too late to learn more about money! If you're ready to expand your financial know-how, here are some resources for all ages and skill levels.

There is a 40% overlap between the states with the worst debt-to-income ratios and those with the lowest financial literacy opportunities in high school

Tips to teach kids about money

The earlier we introduce the concept of money, income and financial responsibility to children, the better our country's financial future will be. A small allowance and exercise savings are a good place to start, but don't forget to cover the sales taxes when you go shopping. You can also throw away the money and get your child a debit card for allowances. That way, you can teach them to keep track of their balance and practice basic math while learning about the interest.

Money matters are easy to play too. You can practice counting money for rewards, offering savings incentives such as a pizza party to spark “interest”, or practice planning and generating business ideas for a family game night. There are plenty of kid-friendly ones Money learning resources available.

The best financial classes for teenagers

Once we hit puberty, money classes get a little more serious. Not only because teenagers have many opportunities to earn their own income, but also because college and college high tuition fees that goes with it, are just around the corner. Research shows that young adults who receive a financial education are less likely to have credit card debt and more likely to apply for and receive grants and financial assistance.

Less than 17 percent of high school students need to take finance courses, while 70 percent of teens have access to these courses. Encourage your teen to take classes that their school offers and work with them at home to enrich their learning.

Younger teenagers are likely thinking about their driver's license and part-time employment. Both are great learning opportunities to take advantage of. Whether or not your child pays for their first car and insurance, let them help you create a savings plan and budget for the car's maintenance and gasoline. When you take out a car loan, let them participate in the process and help calculate the interest rates and monthly payments.

For older teenagers, consider helping them find financial assistance and choosing an emergency credit card. This can give you security and help you build credit at the same time. Make sure they understand the annual fees, APR, and minimum payments. Then sign up for a credit monitoring app like Mint so they can see how on-time payments, missed payments, and credit inquiries can affect their score.

Financial responsibility for adults

If you feel like you've missed out on valuable financial information or are considering your first big purchase like a home or car, there are numerous resources available online to help you learn more about money. The first step is to decide on your lesson.

The first thing to do when creating a budget is to understand the basic budget breakdowns. The most popular system is the 50/30/20 rule, which divides your monthly income into needs, wants and savings. List all of your purchases and divide them into these three categories. Then find out where you need them Spending cuts. Then create a spreadsheet or download a budgeting app to keep you on track.

From there, you can follow financial bloggers, YouTubers, and respected financial figures to keep up to date on general financial trends. Your best bet is to check into things you need to know when you need them. For example, if you're looking to buy a new home, YouTube has hours of resources to walk you through the loan application process Save for a deposit, Utilities, and how much you should save on closing costs.

If you want to learn more directly and robustly, you can always sign up for Community College courses. Many will be available online for you to fit into your schedule and choose topics that are as broad or specific as you like. Many institutions also offer grants, financial assistance, and payment options to help cover costs.

Of course, a certified financial planner is the best way to get current and accurate information. They are an excellent resource for investing and saving strategies and can craft a plan that is tailored to your financial needs.

Although financial literacy varies across the country, there are still many opportunities for you to develop and pass on your financial knowledge. From keeping track of your Credit score to learn how to investThere is always room to improve your financial literacy.


For this study, we compared household income data from the census to the NY Fed's total debt to determine the amount of debt households have compared to their estimated annual debt contributions under the 28/36 rule.

We also examined the Economic Education Council's research on education and access to financial literacy, as well as the Bureau of Consumer Financial Protection's assessments.

The data weights were as follows:

Financial education courses offered (weighed according to requirements) – 50%
Debt-Income Comparison – 30%
Assessment of financial prosperity – 20%

swell:: census | New York Fed | Consumer Financial Protection Office | SoFi

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