Alexander Green: I’ve long lamented that basic financial literacy is not a routine part of a high-school education in this country. Students routinely graduate without understanding compound interest, IRAs, mortgages or why we even have a stock market.
And so they trundle out into the real world, saving little, investing poorly (or not at all) and – typically – paying 18.6% annual interest on their credit cards. Within a few years, they are deep in a hole, trying to dig themselves out, and telling anyone who will listen of the essential inequity of the capitalist system.
It can take the average person years, if not decades, to learn (if ever) how to save, invest, minimize taxes and enjoy a measure of financial independence.
Yet in a new study out of Texas Tech University, Dr. Michael Finke and his colleagues reveal that financial literacy actually worsens as we get older. The study shows that knowledge of basic concepts essential to effective money management declines by about 2% each year after age 60.
However, confidence in financial decision-making abilities