How Much do People Know About Economics and Finance? Financial Illiteracy and the Importance of Financial Education

In the modern financial environment, it is especially important for households to have a high degree of financial savvy. However, as this brief demonstrates, there is widespread financial illiteracy with particularly vulnerable population segments. Many households are unfamiliar with even the most basic economic concepts needed to make sensible saving and investment decisions. This has serious implications for saving, retirement planning, mortgage, and other financial decisions, and it highlights a role for policymakers to improve financial literacy in the population.