About 94% of those surveyed properly identified the definition of asset allocation and 85% understood dollar cost averaging but only 62% understand that the price of a bond or bond fund decreases as interest rates rise.
"It is critical that children learn the grammar of economics and finance, the specialized language that describes how our economy operates," said Nan J. Morrison, president and CEO of Council for Economic Education (CEE). "Without that proficiency, they are likely to remain on the periphery of their own potential."
Currently, only four states require a minimum of one semester of financial literacy education in primary and secondary school and only 20 states require that the topic be taught within another subject area.
That will soon change if Rep. Matt Cartwright has his way. He introduced the Financial Literacy for Students Act, HR 2920 with the support of 23 Representatives earlier this month.
The Act would create incentive grants to states who agree to provide financial literacy education in Title I public elementary and secondary schools.
"The importance of consumer sophistication on financial matters has never been more important than it is in today's economy," said Cartwright. "The key to improving the financial literacy of all Americans is ensuring that our students have access, at all appropriate stages of their education, to formal financial literacy education."
Under current law, individual states are left to create and implement financial literacy education curriculum and courses in their districts and schools.
Below are 5 financial terms that improve your financial literary