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National Center for Education Statistics

Money Matters: Exploring Young Adults’ Financial Literacy and Financial Discussions With Their Parents

Financial literacy is a critical skill for young adults—especially as they begin to enter college or the workforce—that is often needed for partial or full financial independence and increased financial decision making.

The Program for International Student Assessment (PISA)—which is coordinated by the Organization for Economic Cooperation and Development (OECD)—gives us a unique opportunity to analyze and understand the financial literacy of 15-year-olds in the United States and other education systems around the world. PISA is the only large-scale nationally representative assessment that measures the financial literacy skills of 15-year-olds. The financial literacy domain was administered first in 2012 and then in 2015 and 2018. The 2018 financial literacy cycle assessed approximately 117,000 students, representing about 13.5 million 15-year-olds from 20 education systems. The fourth cycle began in fall 2022 in the United States and is currently being conducted.


How Frequently Do Students Discuss Financial Topics With Their Parents?

In 2018, all education systems that administered the PISA financial literacy assessment also asked students to complete a questionnaire about their experiences with money matters in school and outside of school. In the United States, about 3,500 students out of the total 3,740 U.S. PISA sample completed the questionnaire.

This blog post explores how frequently students reported talking about the following five topics with their parents (or guardians or relatives):

  1. their spending decisions
  2. their savings decisions
  3. the family budget
  4. money for things they want to buy
  5. news related to economics or finance

Students’ answers were grouped into two categories: frequent (“a few times a month” or “once a week or more”) and infrequent (“never or almost never” or “a few times a year”).

We first looked at the degree to which students frequently discussed various financial topics with their parents. In 2018, the frequency of student-parent financial discussions varied by financial topic (figure 1):

  • About one-quarter (24 percent) of U.S. 15-year-old students reported frequently discussing with their parents news related to economics or finance.
  • More than half (53 percent) of U.S. 15-year-old students reported frequently discussing with their parents money for things they wanted to buy.


Do male and female students differ in how frequently they discuss financial topics with their parents?

In 2018, higher percentages of female students than of male students frequently discussed with their parents the family budget (35 vs. 32 percent) and money for things they wanted to buy (56 vs. 50 percent). Meanwhile, a lower percentage of female students than of male students frequently discussed with their parents news related to economics or finance (21 vs. 26 percent) (figure 2).



Are Students’ Financial Literacy Scores Related to How Frequently They Discuss Financial Matters With Their Parents?

With a scale from 0–1,000, the PISA financial literacy assessment measures students’ financial knowledge in four content areas:

  1. money and transactions
  2. planning and managing finances
  3. risk and reward
  4. the financial landscape

In 2018, the average score of 15-year-old students ranged from 388 points in Indonesia to 547 points in Estonia. The U.S. average (506 points) was higher than the average in 11 education systems, lower than the average in 4 education systems, and not measurably different from the average in 4 education systems. The U.S. average was also not measurably different from the OECD average.

We also examined the relationship between frequent parent–student financial discussions and students’ financial literacy achievement (figure 3). After taking into account students’ gender, race/ethnicity, immigration status, and socioeconomic status—as well as their school’s poverty and location—the results show that students who reported frequently discussing spending decisions with their parents scored 16 points higher on average than did students who reported infrequently discussing this topic. On the other hand, students who reported frequently discussing news related to economics or finance with their parents scored 18 points lower on average than did students who reported infrequently discussing this topic.  



Do Students Think That Young Adults Should Make Their Own Spending Decisions?

We also explored whether students agreed that young people should make their own spending decisions. In 2018, some 63 percent of U.S. 15-year-old students reported they agreed or strongly agreed, while 37 percent reported that they disagreed.

Do male and female students differ in their agreement that young adults should make their own spending decisions?

When comparing the percentage of male versus female students, we found that a lower percentage of female students than of male students agreed or strongly agreed that young people should make their own spending decisions (59 vs. 66 percent). This pattern held even after taking into account students’ gender, race/ethnicity, immigration status, and socioeconomic status as well as school poverty and location.  


Upcoming PISA Data Collections

A deeper understanding of the frequency of parent–student financial conversations, the types of topics discussed, and the relationships between financial topics and financial literacy could help parents and educators foster financial literacy across different student groups in the United States.

PISA began collecting data in 2022 after being postponed 1 year due to the COVID-19 pandemic; 83 education systems are expected to participate. The PISA 2022 Financial Literacy Assessment will include items from earlier years as well as new interactive items. The main PISA results will be released in December 2023, and the PISA financial literacy results will be released in spring/summer 2024.

Be sure to follow NCES on TwitterFacebookLinkedIn, and YouTube and subscribe to the NCES News Flash to receive notifications when these new PISA data are released.

 

By Saki Ikoma, Marissa Hall, and Frank Fonseca, AIR

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