Chapter 8. Are you ready? Rate your own financial literacy
Every number in the book has a source. To keep the book short, the notes live here instead of in print. Each source is listed with the section of the book it supports and the words it backs up, in the order they appear in the chapter. Web addresses are links; a page may have moved since the date shown.
The chapter page · Chapter 7 sources · All chapters · Chapter 9 sources
What is financial literacy and why is it important?: “In a worldwide survey measuring financial literacy, participants were asked four” · Rate yourself, gently: “In the United States, 57% of adults cleared that bar in 2014”
Klapper, Lusardi and van Oudheusden, Financial Literacy Around the World, S&P Global FinLit Survey, 2015.
Rate yourself, gently: “FINRA’s 2021 national quiz tells the same story another way: given five”
FINRA Investor Education Foundation, National Financial Capability Study, 2021 wave (respondents averaged 2.6 of 5 financial literacy quiz questions correct); figure reported in FINRA Foundation, “Why Is Measured Financial Literacy Declining?,” Insights: Financial Capability, 2024, finrafoundation.org, retrieved September 2026.
Rate yourself, gently: “About a third of the gap was confidence, not knowledge”, “When the quiz offered a “do not know” answer, women chose it”
Bucher-Koenen, Alessie, Lusardi and van Rooij, “Fearless Woman: Financial Literacy and Stock Market Participation,” NBER Working Paper 28723, 2021 (about one-third of the gender gap explained by lower confidence), nber.org, retrieved September 2026.
Why it is not your fault: “As of 2024, 26 states required an economics course to graduate from”
Council for Economic Education, 2026 Survey of the States, and CEE release “Four New States Implement Personal Finance Courses,” March 18, 2026 (39 states require personal finance; 22 require economics, down from 26 in 2024), councilforeconed.org, retrieved September 2026.
Why it is not your fault: “The Council for Economic Education, the nonprofit behind most state economics”
Council for Economic Education, “Supporters” (honor roll of 2022 donors), councilforeconed.org, retrieved September 2026; Federal Reserve Education, federalreserveeducation.org.
Compounding against the current: “Over the 30 years from 1996 to 2026, prices in the United States”, “Against prices that doubled, the saver who did everything right, who” and 1 more · Where your money actually sits: “over those 20 years prices rose about 2.6% a year, which”
Bureau of Labor Statistics, CPI Inflation Calculator, bls.gov/data/inflation_calculator, comparing January 1996 and January 2026 (about $213), and January 2006 and January 2026 (about $1.66 per 2006 dollar); FDIC, National Rates and Rate Caps, monthly, savings account national average, retrieved September 2026.
Where your money actually sits: “which is why the Federal Deposit Insurance Corporation insures deposits up”
FDIC, “Deposit Insurance FAQs,” fdic.gov, 2025.
Where your money actually sits: “The national average savings rate was about 0.4% a year as of”
FDIC, National Rates and Rate Caps, September 2026 (national deposit rate for savings accounts of 0.37 to 0.38%), fdic.gov, as reported from FDIC data by Experian and The Motley Fool, retrieved September 2026.
Where your money actually sits: “Named for a paragraph of the tax code added in 1978”
Internal Revenue Code section 401(k), Revenue Act of 1978.
Where your money actually sits: “the Pew Charitable Trusts has estimated that state plans are more”
Pew Charitable Trusts, “State Pension Funding Levels Stayed Stable Despite Volatility,” October 29, 2025 (funding gap of $1.32 trillion for fiscal year 2023), pew.org, retrieved September 2026.
Where your money actually sits: “the broadest index of American bonds fell about 13%, its worst year”
Bloomberg US Aggregate Bond Index, 2022 total return of about minus 13%, the worst calendar year since the index’s 1976 inception; see Vanguard, “How 2026 May Set the Table for Stronger Bond Returns,” corporate.vanguard.com, 2026, retrieved September 2026.
A preference for time: “The economist Richard Thaler once asked people whether they would rather”
Thaler, “Some Empirical Evidence on Dynamic Inconsistency,” Economics Letters, 1981.
A preference for time: “People treat the present as special. Economists call this present bias”
O’Donoghue and Rabin, “Doing It Now or Later,” American Economic Review, 1999.
A preference for time: “the psychologist Walter Mischel and his colleagues at Stanford sat preschoolers”
Mischel, Ebbesen and Zeiss, Journal of Personality and Social Psychology, 1972.
A preference for time: “Years later, the children who had waited longest appeared to be”
Shoda, Mischel and Peake, Developmental Psychology, 1990.
A preference for time: “In 2013, researchers at the University of Rochester ran the test again”
Kidd, Palmeri and Aslin, “Rational Snacking: Young Children’s Decision-Making on the Marshmallow Task Is Moderated by Beliefs About Environmental Reliability,” Cognition 126, no. 1 (2013); 28 children, mean wait of 12 minutes 2 seconds in the reliable condition and 3 minutes 2 seconds in the unreliable condition.
A preference for time: “In 2018, a larger study, following more than 900 children, found”
Watts, Duncan and Quan, “Revisiting the Marshmallow Test: A Conceptual Replication Investigating Links Between Early Delay of Gratification and Later Outcomes,” Psychological Science 29, no. 7 (2018); 918 children, the correlation with later achievement fell by two-thirds with controls for family background, early cognitive ability and home environment.
A preference for time: “the Chapter 2 idea that a loss hurts about twice as much”
Kahneman and Tversky, “Prospect Theory,” Econometrica, 1979.
Worth repeating: “The word “bank” comes from the Italian banca, the bench a”
Online Etymology Dictionary, “bankrupt,” etymonline.com, retrieved October 2026: from Italian banca rotta, “broken bench”; the custom of breaking a failed banker’s bench is a traditional story, and the allusion is probably figurative.
Try it: “Answer the three questions economists use around the world to measure”, “Roughly 3 out of 10 (30%) American adults got all three right”
Lusardi and Mitchell, “The Economic Importance of Financial Literacy: Theory and Evidence,” Journal of Economic Literature 52, no. 1 (2014), Table 2 (30.2% of US adults answered all three correctly, 2009 National Financial Capability Study).
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