The U.S. is home to many millionaires and billionaires, but the average American falls behind when it comes to financial literacy. According to Financial Literacy Around the World, a Standard and Poor's Rating Services Survey, the U.S. doesn’t even make the list of the top ten most financially literate countries.

When asked five questions about risk diversification, inflation, interest, and compound interest, only 57% of Americans received a passing score. Denmark, Norway, and Sweden each received a score of 71%, followed by Israel and Canada, which each received a score of 68%. Other countries that earned high grades for financial literacy include the U.K, the Netherlands, Germany, Australia, and Finland. The other three countries ahead of the U.S. were New Zealand, Singapore, and the Czech Republic. The U.S. was tied with Switzerland.

Overall, millennials in the U.S. and other developed countries had lower literacy rates than middle-aged adults. In 2015, Investopedia wrote that many U.S. college students lack financial knowledge and are stressed about their financial future. However, in emerging countries, such as China, millennials had higher literacy rates than middle-aged adults.  

In both developed and emerging countries, women had a lower rate of financial literacy (30% compared to 35% for men).

Globally, the countries in which citizens had higher education levels, such as more citizens with post-secondary schooling–scored an average of 15% higher on the survey.

Beyond the Statistics

To gain more insights on the Financial Literacy Around the World survey, Investopedia spoke with Diane Vazza, managing director for Standard & Poor’s Ratings Services.

Investopedia: What is the significance of the study's findings?

Diane Vazza: Two-thirds of adults worldwide are financially illiterate. And in virtually every country across the globe, there is a 5% gender literacy gap.

These data provide important information for policy. We believe our research can make an impact by providing policymakers, NGOs, banks and others who work in the financial inclusion arena a measurement on where people’s understanding of basic financial concepts is currently, and who are the most vulnerable groups.

As the largest study on financial literacy with data from interviews with more than 150,000 individuals across 148 countries, this is the first-ever, in-depth look into these economies. Powered with this information, policymakers and NGOs can tailor their outreach programs and education to targeted audiences and countries where it is most needed

Investopedia: Why is financial literacy so important?

Vazza: As studies have shown, financial illiteracy is a critical barrier to financial inclusion. Because of a lack of knowledge about finance and financial products, many people–especially the poor and women are not able to access banking and financial services and are therefore kept out of financial markets.

Moreover, when they lack knowledge, they are at risk for not only making bad decisions but also to be taken advantage of by unscrupulous actors. When people are able to make informed financial choices regarding saving, housing, education, budgeting, and their careers, they are able to realize their full potential.

Investopedia: How can we improve financial literacy rates? 

Vazza: We are not advocating for a solution, but rather, presenting the extent and scope of the situation. S&P Ratings’ goal for this study was to present the most comprehensive data set on financial literacy to date.

Our hope is that countries, central banks, and NGOs working on financial inclusion will use this study to design and implement national strategies to improve financial literacy rates, thereby addressing key barriers to financial inclusion and economic participation.

Test Your Financial Literacy

So what were the five survey questions used to determine financial literacy? The questions and answers are below:

  1. Suppose you have some money? Is it safer to put your money into one business or investment, or into multiple businesses or investments?
  2. Suppose over the next ten years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today or more than you can buy today?
  3. Suppose you need to borrow $100. Which is the lower amount to pay back: $105 or $100 plus 3%?
  4. Suppose you put money in the bank for two years and the bank agrees to add 15% per year to your account. Will the bank add more money to your account that second year than it did the first year, or add the same amount of money both years?
  5. Suppose you had $100 in a savings account and the bank adds 10% per year. How much money would you have after five years if you did not remove any? More than $150, exactly $150, or less than $150?


  1. Multiple businesses or investments
  2. The same as you can buy today
  3. $100 plus 3%
  4. More money to your account that second year than it did the first year
  5. More than $150

The Bottom Line

While the U.S. may be home to the most millionaires and billionaires in the world, their financial expertise has not trickled down to the average American. A population's ability to manage expenses, avoid scams and make sound financial decisions regarding investments, mortgages and other types of loans is dependent on increasing the country’s collective financial intelligence quotient.