Financial literacy1

(Source: Champlain College)

Oregonians aren't very financially savvy, which can lead to uninformed and poor choices about their money, according to a new national report card on adult financial literacy.

If it's any consolation, however, we're not quite as ignorant, profligate or strapped as adults in most states, according to the report from the Center for Financial Literacy at Champlain College in Vermont.

The center gave grades to each state by tracking adults' financial knowledge, credit, saving and spending, retirement readiness, investing and levels of insurance.

Overall, Oregon eked out a B-minus, which sounds OK. But states were graded on a curve, so there was plenty of grade inflation, according to John Pelletier, director of the center and author of the study. Even the states with the best grades -- Minnesota scored highest, earning an A-minus -- are among a group of low performers, he said.

Oregon Treasurer Ted Wheeler has been sounding the alarm about inadequate retirement savings and financial literacy for years. He said this week that he concurred with the thrust of the study, though not necessarily the grades, "I would give Oregon a D-minus. We can do much better."

The study measured residents of all 50 states on 71 financial literacy factors. Forty-five percent of Oregon's grades - 32 out of the 71 - were C, D or F.

The indicators ranged from credit scores (average 683 in Oregon) and student loan debt (average balance $26,106 in Oregon) to whether they were saving for their children's college education (43 percent of Oregonians do).

Some of the numbers are scary. For instance, only 38 percent of adults in Oregon are spending less than they earn. Only 39 percent can come up with $2,000 in the event of an emergency. Only 29 percent invest outside their retirement account and 23 percent are occasionally overdrawing their checking accounts.

When it comes to credit cards, Oregon adults score a C-minus. Less than half pay their bills in full. They're carrying balances equal to 10 percent of their household incomes, and a third are making only minimum monthly payments.

Oregonians do better with insurance. Only 9.7 percent lack health coverage and only 9 percent don't insure their cars.

Overall, Oregon adults scored similarly to those in Washington and Idaho, and a little better than Californians. The worst grades were recorded in the deep south. Mississippians failed.

"The fundamental issue is if we want this to actually change, we've got to figure out how we educate people," Pelletier said. "It needs to be a priority, like math and reading."

Few states require any form of personal finance education in high school. Oregon doesn't, and only 1 in 5 Oregonians had been offered and participated in financial education, according to the report card.

A 2015 report from Champlain's center graded states on their efforts to teach personal finance. Oregon got a C in that report because personal finance education was not a graduation requirement. Utah, Tennessee, Missouri and Virginia do have that requirement.

Pelletier said surveys also show that many parents are not comfortable talking to teens about money, and are not financial role models for their kids.

"If it's not happening in school and if it's not happening at home, we're telling people to go get a credit card and figure it out on your own, good luck," he said. "It's the school of hard knocks, and you're going to make mistakes."

And making mistakes can put people on a credit treadmill, being charged significantly higher interest rates on credit cards, mortgages and auto loans, and paying more for products like insurance.

Wheeler successfully pushed lawmakers to establish a state-sponsored retirement plan, which won legislative approval last year and starts up in 2017. As part of a status report to the Legislature this month, the Treasury made a series of recommendations on how to increase financial literacy in the state. They included developing a statewide financial education strategy, making one entity responsible for coordinating the efforts, creating an information clearinghouse for financial education resources, and boosting financial education efforts in schools.

Lawmakers created a civics and financial literacy task force in 2007 to make recommendations for improvements K-12 curricula in those areas, buts its suggestions were never fully implemented.

Wheeler can whip off his own litany of scary statistics, like the fact that the average household savings in Oregon amounts to only $3,000. With the competition for teaching hours, he says, it's probably wishful thinking to suggest a separate financial literacy course for students. But he said it should be integrated into existing math curricula around the state.

"I'm probably the fifth Treasurer in a row that has raised red flags about this, and it's been very obvious to me that we're not making this a priority," Wheeler said. "We can put the (state retirement) plan in place, but people need to understand why it's important to participate. That's where we're falling down."

- Ted Sickinger

tsickinger@oregonian.com

503-221-8505; @tedsickinger