My state missed financial literacy. And yours? – InsuranceNewsNet

My certified financial planner peers across the country are probably tired of hearing me sing the praises of living in South Dakota.

One recently emailed some disturbing news that put sour notes in my “South Dakota is God’s Country”. A recent national survey that ranked states’ financial literacy and District of Colombia class South Dakota at the 49th.

The survey appeared on WalletHub in a April 6, 2022story by John S. Kiernan. It collected results from 34,759 responses that spanned three areas: Wallet Hub’s “Wallet Literacy Score”, financial planning and habits, and financial knowledge and education.

You can test your financial literacy by answering the 30 questions Wallet Literacy Survey. Even as a financial expert, I didn’t get a perfect score, but I was relieved to get a score of 97%. South Dakota ranked 39th in this assessment.

The Financial Planning and Habits Survey assessed 10 domains. The share of adults who spend more than they earn, have funds for rainy days, and save for their children’s college education accounted for 50% of the total score. South Dakota embarrassingly ranked a dismal 50th.

The financial knowledge and education section assessed seven areas. Getting a good grade in your high school financial literacy course, graduating from high school, and getting a bachelor’s degree from a college accounted for 75% of the score. It was South Dakota best performance in 22nd.

Unfortunately, when the scores in these three domains were combined, South Dakota ranked an embarrassing 49th in the nation, just ahead of Louisiana and Arkansas. The other states in the bottom 10 were Oklahoma, Alaska, Mississippi, West Virginia, Connecticut, New Mexico and the District of Colombia.

The first 10 states were Nebraska, Utah, Virginia, Colorado, New Hampshire, North Carolina, Maine, Iowa, Minnesota and New Jersey.

Interestingly, financial literacy correlates with political party affiliation. Seven of the 10 lowest-ranked states are considered “red” or lean Republican states; seven of the 10 states with the highest financial literacy are considered “blue” or lean Democrat states. I will not speculate on the reasons and will leave this interpretation to analysts smarter than me.

Other results found that men scored higher than women, the higher the income, the higher the score, the higher the education, the higher the score, and married people scored higher. higher than any other group. Those with a college degree scored 50% higher than those without a high school diploma. In general, the older the respondents, the better they do, with the exception of the 55-64 age group which scores the highest.

Not surprisingly, there was a strong correlation between those with a strong education and a high financial literacy score compared to those with a low education and a poor financial literacy score. The former had the highest combined scores and the latter had the lowest combined scores. Similarly, those with the highest credit scores and strong financial literacy also had the highest combined scores, while those with low credit scores and low financial literacy had the lowest combined scores.

One might conclude that the biggest influence on financial planning is financial literacy and education, but South Dakota is proof that this is not the case. South Dakotans scored in the 43rd percentile for education and the 75th percentile for financial literacy, but near bottom (98th percentile) for financial planning and habits. In contrast, 28 states ranked below South Dakota in financial knowledge and education, but more in financial planning and habits.

If education isn’t a predictor of financial literacy and good financial planning, then what is? I don’t know, and the researchers didn’t speculate. Whatever the special sauce for good financial planning habits, South Dakota must discover the recipe.

Rick Kahler is president and owner of Kahler Financial of fast city.