Infographic: America's Growing Financial Literacy Problem
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America’s Growing Financial Literacy Problem

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America's Growing Financial Literacy Problem

America’s Growing Financial Literacy Problem

Making major personal finance decisions can be daunting for anyone.

Whether the decision is related to paying back student debt or how to invest for the first time, the outcomes of these decisions have a long-term impact on the quality of our lives. Smart decisions can lead to achieving financial independence, while bad decisions can lead to years of being stuck in the “hole”.

Even though it’s clear that financial literacy is important, there’s a big problem: it’s actually been dropping for years in the United States.

Diagnosing the Problem

Today’s infographic was done in conjunction with Next Gen Personal Finance, a non-profit that provides a free online curriculum of personal finance courses geared to students.

The graphic paints a troubling picture of the current financial literacy situation in the country, while demonstrating why personal finance is a crucial area of study for our youth.

Here are some of the indicators that show literacy is dropping:

  • The U.S. ranks 14th globally in terms of financial literacy
  • With a 57% literacy, the U.S. beats Botswana (52%) but gets edged out by countries like Germany (66%) or Canada (68%)
  • Only 16.4% of U.S. students are required to take a personal finance class in schools
  • 76% of millennials lack basic financial knowledge
  • Between 2009-2015, Americans got worse at answering five key personal finance questions posed by FINRA – a major U.S. financial regulator

And worse, this lack of knowledge is translating into anxiety and even fear.

  • Four of five adults say they were never given the opportunity to learn about personal finance
  • 70% of millennials are stressed and anxious about saving for retirement
  • 22% of millennials feel overwhelmed about their finances
  • 13% of millennials feel scared

Meanwhile, student debt is soaring to new highs – how do we put our students in a better spot to succeed?

The Road Ahead

As financial products continue to increase in complexity, the road ahead is not an easy one.

However, there is still a great case for optimism: 60% of Americans say they know someday they will need to be more financially secure – they just don’t know how to get there. This number increases to 70% for those between the ages of 18-39 years old.

This means there is actually a great thirst for financial education out there – the question is just how to best deliver that information in a compelling way.

Another good sign? The youngest generation, Gen Z, is already starting to think about money differently:

Gen Z saw millennials struggle with wage stagnation and huge college debt, so they took note and are making a conscious effort to approach money and debt differently.

– Jason Dorsey, Center for Generational Kinetics

Real World Benefits

Increased financial literacy translates into real world benefits for individuals, and to the economy as a whole.

People with strong financial skills are better at job planning and saving for retirement. Meanwhile, financial savvy investors are more likely to diversify risk, and students that take a personal finance course see up to a 5.2% increase in credit scores within two years.

Lastly, consumers that understand compound interest:

  • Spend less on transaction fees
  • Accrue less debt
  • Incur lower interest rates on loans
  • Save more money

And this is just scratching the surface of what could be possible.

Making the right financial decisions can help people meet their own personal goals, live a life of abundance, get out of debt, and become financially independent.

This infographic was originally published on the Wealth 101: A Crash Course in Personal Finance minisite, a collaboration between NGPF and Visual Capitalist

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Personal Finance

Ranked: The Best Countries to Retire In

Which countries are the best equipped to support their aging population? This graphic show the best countries to retire in around the world.

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which countries are the best places to retire

Ranked: The Best Countries to Retire in Around the World

Our global population is getting older. By 2050, the OECD predicts that 30% of people worldwide will be aged 65 or over.

While some countries are relatively prepared to handle this increase in the elderly demographic, others are already feeling the squeeze and struggling with the challenges that come with a rapidly aging population.

Which countries are the best equipped to support their senior citizens? This graphic uses data from the 2022 Natixis Global Retirement Index to show the best countries to retire in around the world, based on several different factors that we’ll dig into below.

What Makes a Country Retirement-Friendly?

When people consider what makes a place an ideal retirement location, it’s natural to think about white sand beaches, hot climates, and endless sunny days. And, in truth, the right net worth opens up a world of opportunity of where to enjoy one’s golden years.

The Global Retirement Index (GRI) examines retirement from different, more quantitative perspective. The annual report looks at 44 different countries and ranks them based on their retirement security. The index considers 18 factors, which are grouped into four overarching categories:

  • Health: Health spend per capita, life expectancy, and non-insured health spend.
  • Quality of Life: Happiness levels, water and sanitation, air quality, other environmental factors, and biodiversity/habitat.
  • Material Wellbeing: Income per capita, income equality, and employment levels.
  • Finances in Retirement: Government debt, old-age dependency, interest rates, inflation, governance, tax pressure, and bank non-performing loans.

Using these 18 metrics, a score from 0.01 to 1 is determined for each country, which is then converted to a percentage. For a more detailed explanation of the report’s methodology, explore Appendix A (page 72) of the report.

The Top 25 Best Countries to Retire in

With an overall score of 81%, Norway comes in at number one as the most retirement-friendly country on the list.

RankCountryScoreHealthQuality
of Life
Material
Wellbeing
Finances in
Retirement
1🇳🇴 Norway81%91%87%79%69%
2🇨🇭 Switzerland80%90%86%69%74%
3🇮🇸 Iceland79%88%86%77%68%
4🇮🇪 Ireland76%89%80%67%70%
5🇦🇺 Australia75%88%77%66%72%
6🇳🇿 New Zealand75%85%81%64%71%
7🇱🇺 Luxembourg75%91%81%72%59%
8🇳🇱 Netherlands75%89%80%78%56%
9🇩🇰 Denmark74%86%88%76%54%
10🇨🇿 Czech Republic73%76%68%84%64%
11🇩🇪 Germany72%87%80%71%55%
12🇫🇮 Finland71%84%89%63%55%
13🇸🇪 Sweden71%90%87%59%56%
14🇦🇹 Austria71%86%82%69%54%
15🇨🇦 Canada71%87%74%58%67%
16🇮🇱 Israel70%82%74%60%66%
17🇰🇷 South Korea70%80%59%68%73%
18🇺🇸 United States69%85%72%56%67%
19🇬🇧 United Kingdom69%83%82%61%55%
20🇧🇪 Belgium69%85%74%70%51%
21🇸🇮 Slovenia69%82%69%77%51%
22🇯🇵 Japan69%91%67%72%51%
23🇲🇹 Malta68%78%61%72%63%
24🇫🇷 France66%90%78%57%48%
25🇪🇪 Estonia66%68%68%60%68%

Norway is at the top of this year’s ranking for several reasons. For starters, it achieved the highest score in the Health category, largely because of its high average life expectancy, which is 83 years old, or 9 years longer than the global average.

Norway also has the highest score of all the countries for Governance, a category gauged by assessing country corruption levels, political stability, and government effectiveness, and is in a three-way tie with Japan and Luxembourg in the Health category.

Second on the list is another European country, Switzerland, with an overall score of 80%. It’s the highest-ranked country for environmental factors, and it also has the highest overall score in the Finances in Retirement category.

A Regional Breakdown

While European countries dominate the top 10 in the ranking, how does Europe rank as a region as a whole? Before diving in, it’s important to note that the study actually breaks up Europe into two sections: Eastern Europe (grouped with Central Asia) and Western Europe.

RankRegionOverall Score
1North America69%
2Western Europe66%
3Eastern Europe and Central Asia49%
4Latin America37%
5Asia Pacific32%

And from a regional perspective, North America comes in first place despite the fact no countries in the region made it into the top 10. North America only has two countries included in the ranking: Canada (#15) and the U.S. (#18), which both rank relatively high.

In contrast, Western and Eastern Europe have more countries to account for, which ultimately lowers their regional average.

The Future of Retirement

As longevity rises and the retirement aged population continues to increase worldwide, many countries are opting to change their pension policies in an effort to encourage people to stay in the workforce longer.

For instance, in 2018, people in the UK could claim their State Pension once they turned 65. By 2028, this age requirement will be raised to 67.

However, government intervention may not be necessary, as many people around the world are already staying in the workforce beyond the traditional retirement age (perhaps more out of necessity than choice).

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Personal Finance

How Do Americans Spend Their Money, By Generation?

This interactive graphic shows a breakdown of how average Americans spend their money, and how expenses vary across generations.

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Annual Expenditure in the U.S. by Generation

How Americans Spend Their Money, By Generation

In 2021, the average American spent just over $60,000 a year. But where does all their money go? Unsurprisingly, spending habits vary wildly depending on age.

This graphic by Preethi Lodha uses data from the U.S. Bureau of Labor Statistics to show how average Americans spend their money, and how annual expenses vary across generations.

A Generational Breakdown of Overall Spending

Overall in 2021, Gen X (anyone born from 1965 to 1980) spent the most money of any U.S. generation, with an average annual expenditure of $83,357.

GenerationBirth Year RangeAverage Annual Expenditure (2021)
Silent1945 or earlier$44,683
Boomers1946 to 1964$62,203
Generation X1965 to 1980$83,357
Millennials1981 to 1996$69,061
Generation Z1997 or later$41,636

Gen X has been nicknamed the “sandwich generation” because many members of this age group are financially supporting both their aging parents as well as children of their own.

The second biggest spenders are Millennials with an average annual expenditure of $69,061. Just like Gen X, this generation’s top three spending categories are housing, healthcare, and personal insurance.

On the opposite end of the spectrum, members of Generation Z are the lowest spenders with an average of $41,636. per year. Their spending habits are expected to ramp up, especially considering that in 2022 the oldest Gen Zers are just 25 and still early in their careers.

Similarities Across Generations

While spending habits vary depending on the age group, there are some categories that remain fairly consistent across the board.

One of the most consistent spending categories is housing—it’s by the far the biggest expense for all age groups, accounting for more than 30% of total annual spending for every generation.

GenerationAverage Spend on Housing (2021)% of Total Spend
Silent (1945 or earlier)$16,65637.3%
Boomers (1946 to 1964)$21,27334.2%
Generation X (1965 to 1980)$26,38531.7%
Millennials (1981 to 1996)$24,05234.8%
Generation Z (1997 or later)$15,44937.1%

Another spending category that’s surprisingly consistent across every generation is entertainment. All generations spent more than 4% of their total expenditures on entertainment, but none dedicated more than 5.6%.

GenerationAverage Spend on Entertainment (2021)% of Total Spend
Silent (1945 or earlier)$2,0274.5%
Boomers (1946 to 1964)$3,4765.6%
Generation X (1965 to 1980)$4,6945.6%
Millennials (1981 to 1996)$3,4575.0%
Generation Z (1997 or later)$1,6934.1%

Gen Zers spent the least on entertainment, which could boil down to the types of entertainment this generation typically enjoys. For instance, a study found that 51% of respondents aged 13-19 watch videos on Instagram on a weekly basis, while only 15% watch cable TV.

Differences Across Generations

One category that varies the most between generations and relative needs is spending on healthcare.

As the table below shows, the Silent Generation spent an average of $7,053 on healthcare, or 15.8% of their total average spend. Comparatively, Gen Z only spent $1,354 on average, or 3.3% of their total average spend.

GenerationAverage Spend on Healthcare (2021)% of Total Spend
Silent (1945 or earlier)$7,05315.8%
Boomers (1946 to 1964)$6,59410.6%
Generation X (1965 to 1980)$5,5506.7%
Millennials (1981 to 1996)$4,0265.8%
Generation Z (1997 or later)$1,3543.3%

However, while the younger generations typically spend less on healthcare, they’re also less likely to be insured—so those who do get sick could be left with a hefty bill.

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