The situation is actually getting worse. The number of states that require students to take tests on financial life skills dropped from nine in 2009 to just five in 2011.
At the federal level, attempts at teaching the basics of finance are scattershot at best. As of last summer, the U.S. Government had 16 overlapping programs that teach this stuff, according to the Government Accountability Office. That number doesn't include the Consumer Financial Protection Bureau, which assumed primary responsibility for coordinating such programs when its 10-member Office of Financial Education opened last summer.
Do all these programs succeed in helping consumers make better financial decisions? For the most part, the GAO said it couldn't tell.
This is particularly troubling because we know the difference that effective financial education can make in young peoples' lives. Teens and young adults who grow up in states that require financial education courses are significantly more likely to put money into savings and pay their credit card balances in full every month, and less likely to max out their credit cards, make late credit card payments or become compulsive shoppers, according to a study by Dr. Michael Gutter of the University of Florida.
Classes and testing on financial basics help people thrive all the way into their golden years, according to research by Annamaria Lusardi, a professor of financial literacy at Dartmouth. Answering just one additional question correctly on a financial literacy test boosts the chances that a person will plan responsibly for retirement by up to 10 percent.
What's important is to help young people see that financial basics are both easy to learn and vital to their long-term well-being. Tying that education to something many teens care about deeply -- like getting a car -- is one path to accomplish that.
"It is a low-cost, low-barrier option for getting a student interested, and they have an incentive to do so," Nan J. Morrison, CEO of the Council for Economic Education, says about the proposal.
When we commit to including financial literacy questions on state drivers' tests, we need not start from scratch. The council has 60 years of experience developing curricula and training teachers on how to make financial life skills fun and accessible. Other organizations including the Georgia Consortium for Personal Financial Literacy do similar work for people of all ages.
Since the questions will appear on driver's tests, they should be car-related, Lusardi says. Here are some good potential questions:
Whether it's a car, an auto loan or a credit card, it's our parental responsibility to make sure that our kids are safe.
Adam Levin is chairman and cofounder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.