Financial
literacy is necessary to successfully navigate life’s complicated financial
decisions. Unfortunately, basic financial skills of budgeting and saving are
often never taught to young adults. There have been numerous studies that find
that young adults are not being provided a sufficient financial education. For
example, Mandell (1997) examines financial literacy for a sample of high school
students and finds that these students are not receiving a sufficient education
in financial matters. Often the tendency to incur excessive debt develops at a
very young age. Mae (2005) finds that 76% of undergraduate students have credit
cards and 47% have four or more cards. These students had an average credit
card debt of $2,169. In today’s consumer society, the importance of savings and
budgeting is critical to financial success. Regardless of income, an individual
will eventually go bankrupt if they spend more than they earn. We have seen
countless celebrities and athletes who earn millions of dollars go bankrupt due
to poor budgeting, inadequate savings and excessive debt. Budgeting,
controlling debt and maximizing savings are the keys to financial success.

Financial
education should begin at a young age so young adults can begin their career
making prudent financial decision that will help them achieve financial
success. There is very little data that examines the financial literacy of
young adults and the extent that they are provided courses in money management.
In this paper, we use data from a survey conducted in 2012 by the Programme for
International Student Assessment (PISA). This organization has been gathering
information about 15-year old student’s math and science abilities for years
however the 2012 survey is the first survey that included questions about money
management and financial literacy. The countries that participated in the 2012
PISA Students and Money survey are: Australia, Belgium, Czech Republic,
Estonia, France, Israel, Italy, New Zealand, Poland, Slovak Republic, Slovenia,
Spain, United States of America, Shanghai-China, Colombia, Croatia, Latvia, and
Russian Federation. In this paper, we examine the following research questions.

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1.
Is financial literacy for each country correlated with GDP per capita?

2.
Is financial literacy for each country correlated with social equality?

3.
Is financial literacy correlated with the availability of money management
courses?

We
run a regression model to determine if money management courses impact
financial literacy in each country. We run a cumulative probit model to examine
if students who take money management courses are more likely to avoid debt. The
following section reviews the pertinent literature on this topic.