StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Teach Me

Why You May Have a Financial Literacy Problem

April 01, 2019

3 min read

Here’s a question: If you borrow $1,000 at 20% compound annual interest rate, and you make no payments, how long would it take for the amount you owe to double?

Stumped? You’re not alone. Less than half of Stash customers answered that question correctly on our 2019 Financial Literacy survey. (The correct answer is three and a half years.)

Every year Stash conducts a study of its users, to understand how well they grasp financial basics.  In February, Stash polled 4,800 customers about their financial knowledge and habits, including the use of credit, investing and retirement fundamentals, as well as basic financial principles such as how interest rates and inflation affect borrowing and saving.

While the results of Stash’s 2019 survey show slight improvements among our customers compared to our 2018 survey, lack of financial literacy continues to be a big problem in the U.S. for everyone. The Stash survey shows that so-called Generation Z, those who are currently between 18 and 24, may particularly need more financial education.

Meanwhile, managing credit continues to be a big problem across all age groups. One way you can see that is in the ever-increasing amount of debt that consumers take on. Consumer debt is at a record high, of more than $4 trillion, which comes out to about $4,300 per household.

Here are some top takeaways from this year’s survey:

Gen Z may need more education

So-called Generation Z, people who are currently between 18 and 24 years old, showed less knowledge of financial basics than older generations, particularly when it comes to using credit.

For example, two-thirds of Gen Zers demonstrated confusion about the advantages and disadvantages of credit.

Women vs. Men

Women and men showed very similar knowledge of financial basics, with some differences related to investing and use of credit.  In fact, 81% of women answered all questions on the survey correctly, compared to 84% of men.

However, there were differences, particularly when it comes to some of the more technical aspects of investing:

In contrast, women seemed to know more about credit, with 44% saying one potential benefit of having a credit card is to build credit, compared to 39% of men. Similarly, slightly more women than men said the best tactic with credit cards was to pay your balance in full each month (78% compared to 76%).

Check yourself

Becoming financially literate is a lifelong process. Check out some of these questions. If you answer “no” to more than one of them, it may be time to start brushing up on your financial knowledge.

Make saving and investing a habit.

Go automatic with Auto-Stash.

Start now

Make saving and investing a habit.

Go automatic with Auto-Stash.

Start now

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

The survey was conducted online within the United States by STASH using SurveyMonkey technology in February 2019. The survey was completed by 4,800 people. Of the 4,800 individuals: 39.73% (1,907) identified themselves as females, 59.96% (2,878) identified themselves as males, and .31% (15) identified themselves as “other.” “Gen Z” is defined by birth year of clients between the ages of 18-24 and “Millennials” is defined by birth year of clients between the ages of 25-34 as of February 2019. This material has been distributed for informational purposes only, and is not intended as investment, legal, or tax advice.
Next for you
Are Women Better Investors? Stash Data Flips Gender Stereotypes

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
budgeting politics market news Technology Careers
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.