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70% of Americans can't answer these 3 basic money questions

First

First

Lifer
https://www.cnbc.com/2017/08/11/most-americans-cant-answer-these-basic-money-questions.html

Question 1
Suppose you have $100 in a savings account and the interest rate was two percent per year. After five years, how much do you think you would have in the account if you left the money to grow?


A. More than $102
B. Exactly $102
C. Less than $102
D. I don't know

The correct answer is A. You'd have $102 after the first year. Over the next four years, interest will grow on that $102, meaning you'll have more than $102. It's a phenomenon known as compound interest.
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Is it the inflation one that trips people up I guess? Fuck those results are kinda depressing. I wonder how much these lack of financial fundamentals play into income inequality. If you don't know what inflation is, how can you be informed enough to save for your kid's college/home/wedding or save for your own retirement? Just seems nutty.
 
To be fair, "I don't know" is probably the best answer (how can we be certain that any given savings account will be solvent after 5 years?--considering that we are approaching Black Friday levels of income disparity and unrestrained, non-fundamental market growth), followed by: "Holy shit--a savings account with 2% interest? Where?!?!?!"
 
God. They couldn't even get the quiz explanation right. They are saying it's more than $102 because of compound interest. No it's more than $102 even if it were simple interest. It would be so much better if the answers were relative to $110. Then it would matter if it were simple or compound interest.

And I'm not at all surprised by the results. My wife probably couldn't answer them. Well, actually she could. But since she thinks she's bad at money and math she probably wouldn't overcome that to realize they are very basic questions.
 
First said:
https://www.cnbc.com/2017/08/11/most-americans-cant-answer-these-basic-money-questions.html

Is it the inflation one that trips people up I guess? Fuck those results are kinda depressing. I wonder how much these lack of financial fundamentals play into income inequality. If you don't know what inflation is, how can you be informed enough to save for your kid's college/home/wedding or save for your own retirement? Just seems nutty.
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Research shows that financial education has little effect on people's financial choices so probably not so much.

https://psmag.com/economics/quest-improve-americas-financial-literacy-failure-sham-72309
 
imported_tajmahal said:
1. Public schools
2. Teachers unions
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Solution: For-profit schools that have worse-than-public-schools performance, while paying teachers less money so more of the money can go to the shareholders who own the charter school performing worse than public schools!

You conservatives are brilliant fucking idiots when it comes to making every god damn problem 1000% worse while making the rich and powerful richer.

Absolutely fucking brilliant.
 
imported_tajmahal said:
1. Public schools
2. Teachers unions
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3. Home Life.

Money should be taught at home. The issue us many people have this stupid thing that thinking about money and talking about it is somehow awful. "You can't talk about money!" Who said? The reason most people have money issues is because they don't put any value on financial literacy.
 
Mai72 said:
3. Home Life.

Money should be taught at home. The issue us many people have this stupid thing that thinking about money and talking about it is somehow awful. "You can't talk about money!" Who said? The reason most people have money issues is because they don't put any value on financial literacy.
Click to expand...
Long ago, we learned money math at school, including compound interest. It's no longer taught, I did get all 3 questions right, and the fact that many can't is scurry, but explains why a housing bubble happens.
 
interchange said:
God. They couldn't even get the quiz explanation right. They are saying it's more than $102 because of compound interest. No it's more than $102 even if it were simple interest. It would be so much better if the answers were relative to $110. Then it would matter if it were simple or compound interest.

And I'm not at all surprised by the results. My wife probably couldn't answer them. Well, actually she could. But since she thinks she's bad at money and math she probably wouldn't overcome that to realize they are very basic questions.
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I see this all the time. People becomes so convinced they can't do something they won't even try. Somewhere she learned she wasn't good at math and allowed that to be a fact. People can't even make change if the cash register goes down and that is profoundly easy to do if you can simply count. Put downs again........
 
imported_tajmahal said:
1. Public schools
2. Teachers unions
Click to expand...

BS. I had absolutely no problem and all of my schooling (except post-graduate) was public schools, union teachers. But then again my education was before the modern "teaching for the test"-we actually had curriculum that focused on imparting knowledge and thinking skills.
 
Thump553 said:
BS. I had absolutely no problem and all of my schooling (except post-graduate) was public schools, union teachers. But then again my education was before the modern "teaching for the test"-we actually had curriculum that focused on imparting knowledge and thinking skills.
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The fact that 70% can't correctly answer those simple questions shows our society has too much focus on irrelevant things.
 
brianmanahan said:
uh, FDIC?
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FDIC insures up to $250k, sure...but that isn't a great amount and what happens when there is no pot to insure from?

...it's a near doomsday scenario, but I was specifically talking about October 1929, and the very specific conditions that created the total lack of savings trust...pretty much the same conditions we are looking at now.
 
I can't (or won't) answer those questions because I'm too old and distracted and can no longer be bothered with proving myself in pointless questionaires and tests (in very stark contrast to how I was as an insecure teenager). How people answer on such questions where there are no real rewards for getting them right, doesn't necessarily say anything about how they would respond in the real world when the stakes were significant.

That said, I also can't be arsed to read through the entire academic paper the linked article links to, in order to find out if they conducted this study with real financial rewards for those getting it right. But most such experiments I read about seem to involve no, or very small, stakes to the participants.
 
ch33zw1z said:
Long ago, we learned money math at school, including compound interest. It's no longer taught, I did get all 3 questions right, and the fact that many can't is scurry, but explains why a housing bubble happens.
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If true, then I agree this is a problem, but these are so basic that any responsible parent should be making sure their kids understand them.
 
werepossum said:
If true, then I agree this is a problem, but these are so basic that any responsible parent should be making sure their kids understand them.
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No doubt. But we know how parental responsibility goes. My parents would've been considered "responsible", didn't teach me this stuff.
 
Mai72 said:
3. Home Life.

Money should be taught at home. The issue us many people have this stupid thing that thinking about money and talking about it is somehow awful. "You can't talk about money!" Who said? The reason most people have money issues is because they don't put any value on financial literacy.
Click to expand...
Well said. I agree with others that this stuff should be taught in school, but parents have the ultimate responsibility to make sure their children have all the tools they need to be decent, successful adults. Most parents don't have the knowledge to prepare children for careers as accountants or doctors or engineers, but this level of understanding is both critical and well within the abilities of the vast majority of parents, especially in the Internet age.
 
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