Thursday, April 27, 2006 | Married & Mortgaged

Parenting magazines and personal finance experts have been warning parents to coach their kids about finances for years. Unfortunately, a recent survey indicates those efforts aren’t producing mind-blowing results.

High school seniors’ average score on a recent nationwide test of basic finance know-how was 52.4 percent. That’s failing according to any conventional academic scale.

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The test was given as a survey to 5,775 students in 37 states by the Jump$tart Coalition for Personal Finance Literacy and sponsored by the Merrill Lynch Foundation. The survey is conducted biennially and administered by individual teachers in classes other than finance and management. The goal is to test broad personal finance knowledge rather than recall from recent coursework. The 2005-2006 score results marked a slight increase over 2003-2004, when the average score was 52.3 percent.

After falling from 57.3 percent in 1997-1998, financial literacy scores are up from the low 50.2 percent in 2001-2002. Survey organizers say the results indicate that despite recent efforts to tackle financial illiteracy, students still have a lot to learn.

Sure, your kid aced the AP Calculus exam, but does she know the correct answer to this question:

Many savings programs are protected by the federal government against loss. Which of the following is not?

What about this one:

If you had a savings account at a bank, which of the following would be correct concerning interest earned on the account?

Nearly 80 percent of students surveyed got the second question wrong. You can take the test yourself or give it to your teen. has shortened the survey to 30 questions, excluding a section seeking students’ personal information and feelings about money. You can find the full survey at

Caucasian students did score higher than minorities, but with an average of 55 percent, Caucasian students aren’t scoring much better than the 52.4 percent average for all students. African Americans averaged 44.7 percent, while Hispanics averaged 46.8 percent.

Students from the highest income families – more than $80,000 per year – have widened their margins over the next highest group – students from families earning between $40,000 and $80,000. Analysts don’t know whether that’s because affluent families and school districts are more focused on financial literacy, or whether rocketing costs of higher education are requiring even affluent students to bear more of the burden for their educations instead of being blissfully ignorant.

Even more distressing is that the average score among students who reported taking an entire course in money management or personal finance is 51.6 percent, slightly below the average for all students. Whatever they’re learning in class, they don’t seem to retain the information. To find out whether financial literacy makes any difference, Jump$tart asked the 38.7 percent of students with checking accounts whether they ever bounced a check. Those who had never bounced a check had average scores of 53.4 percent, while those who had bounced a check averaged 45.8 percent.

The survey found that there are several key concepts that are not well understood by high school seniors.

– Only 14.2 percent of students felt that stocks are likely to have higher average returns than savings bonds, savings accounts and checking accounts over the next 18 years despite the fact that there has never been an 18-year period when this was not true.

– Only 22.7 percent know that interest on savings accounts may be taxable.

– Only 40.3 percent know they could lose their health insurance if their parents become unemployed.

At least part of the problem may be lack of early childhood education in financial literacy; experts recommend that parents teach kids about money from an early age.

You can even send your kid to money camp this summer, a concept Married & Mortgaged intends to explore in a future column. Toward that end, please e-mail Catherine MacRae Hockmuth if you are planning to send or have already sent your kids to a personal finance camp.

Catherine MacRae Hockmuth is a freelance writer in Chula Vista. “Married & Mortgaged” runs every other Thursday. You can send a letter to the editor here.

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