Financial Literacy: U.S. Trails … Brazil and Mexico?

A new survey from Visa ranks 28 nations by their commitment to financial education. The U.S. finishes fourth. But everyone fails.

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Overview of Rio de Janeiro, Brazil

The global movement to teach individuals how to better handle their financial affairs is just getting started, and a survey that Visa International will unveil today shows just how far the movement has to go. Financial literacy scores in the 28 nations that were polled topped out at just over 50%–a flunking mark by almost any standard.

The highest score went to Brazil (50.4%), followed by Mexico (47.8%), Australia (46.3%), the U.S. (44.6%), Canada (43.8%) and New Zealand (43.7%). At the bottom were Pakistan (27.3%), Indonesia (27.7%), Vietnam (31.8%), South Africa (34%) and Morocco (34.4%). While all the scores were low, countries at the top generally are regarded as having the strongest financial education policies, especially Australia, Canada, New Zealand and the U.S. So perhaps there has been some payoff.

(MORE: Is Forgiving Student Loan Debt a Good Idea?)

Most striking about the survey is that two developing economies wound up on top—Brazil and Mexico. Yet Visa officials explain that may not be such an oddity. “Don’t mistake wealth for financial literacy,” says Jason Alderman, Senior Director of Global Financial Education. He’s right of course. How many celebrities wind up flat broke? Poor nations often end up near the top of global happiness polls, too.

“Brazil and Mexico are emerging economies,” Alderman says. “But their people understand the financial fundamentals that many in developed countries do not: You need to save for emergencies and teach your children about money from an early age.” That evidently isn’t happening most places. The survey found that most people in the world have less than three months of living expenses set aside for emergencies and that family money talk is exceedingly rare.

(MORE: More Americans ‘Flunk’ Themselves in Personal Finance)

Visa polled individuals in five areas of personal finance: budgets, emergency funds, family discussion of money issues, teen financial preparedness, and school-based financial education programs. The rankings are based on a combined score across the five categories. Key findings:

  • Income and financial fitness are not the same thing In Canada, 39% of those with less than a three-month emergency fund are high earners while just 34% are low earners. This is a common experience across country lines.
  • Young people are not learning about money In most countries, a majority of those polled said teenagers and young adults do not understand money-management basics. The U.S. posted its lowest score on this question and finished at the bottom of the pack.
  • Asians are the best savers The Chinese were the best at saving with an average 3.9 months of expenses saved. They were followed by Taiwan, Hong Kong and Japan. The U.S. averages 2.9 months and came in 6th place.
  • The family talks about money in Latin America Mexico and Brazil topped the list of places that parents talk with their kids about money. Mexicans talk with their kids about money 42 days a year, on average, and Brazilians 38. American families talk with their kids about finances 26 days a year.
  • Brazilians get an early start Brazilians believe that schools should start financial education at the age of nine. Vietnam fell on the opposite end of the spectrum, believing schools should start this line of teaching at age 14. In the U.S. the average age that people felt that government should require kids to start learning about money was 12.