Carrie Schwab Pomerantz

A recent financial literacy survey aimed at high school and college students included the following sample questions. Just for the fun of it, see if you can answer them correctly.

1. If your credit card is stolen and the thief runs up a total debt of $1,000, but you notify the card issuers as soon as you discover the theft, what is the maximum amount you can be forced to pay according to Federal law?

a) $500
b) $1,000
c) Nothing
d) $50

2. Which of the following types of investments would best protect the purchasing power of a family's savings in the event of a sudden increase in inflation?

a) A 10-year bond issued by a corporation.
b) A certificate of deposit at a bank
c) A house financed with a fixed-rate mortgage
d) A 25-year corporate bond

3. Which of the following savings programs is not protected by the federal government against loss?

a) A bond issued by one of the 50 states
b) A U.S. Treasury bond
c) A U.S. savings bond
d) A certificate of deposit at a bank

(answers at end of column)

On the surface, these seem like questions we should all be able to answer easily. If you did, that's great. But chances are you didn't learn this type of information in school. I know that I didn't, although I did learn how to sew a button.

The 2008 results of the biennial survey - released last week by the Jump$tart Coalition for Personal Financial Literacy - showed that students have an alarming lack of financial knowledge. High school seniors answered only 48.3 percent of the 31 questions correctly, down from 52.4 percent just two years ago. College students, who were included in the survey for the first time this year, fared slightly better with a score of 62 percent.

These aren't encouraging numbers, especially in the face of current economic difficulties. And unfortunately only three states require students to take a course in personal finance (Missouri, Tennessee, Utah), with another 15 insisting that financial education be incorporated into other courses.

At the same time, everyday money management is becoming more and more difficult.

From credit cards to mortgages to saving for college, people are being asked to make complex financial decisions with very little preparation. Plus, with the proliferation of self-directed retirement accounts, current poor financial education is going to translate into a lot of future difficulty for generations to come.

When you add the reluctance of many people to even talk about money to this general lack of formal financial education, whether from feelings of insecurity, superiority or even a lack of interest, the problem is compounded. But the good news is there are some signs that the national psyche is shifting.

Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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