By Patricia Uceda, Fall 2014 Graduate Research Assistant
This week we’ve spoken about increased financial risk renters face compared to homeowners. Just to recap, they are more at risk for financial fragility, income shock, and high levels of debt. On top of this, the National Financial Capability Study also found that renters have much lower financial literacy levels than homeowners, which could impact their ability to make effective financial decisions on a daily basis.
Each survey respondent was given a short quiz about financial topics. Only 30% of renters answered a question about risk correctly, as compared with 54% of homeowners. Only 21% of renters could answer a question about bond price, and 54% could answer a question about interest rates. Overall, only 28% of renters got four or more of the questions correct, compared with 45% of homeowners.
Because of their high financial risk and with low financial knowledge, renters are certainly a sub-group of the American population that could benefit from increased financial education efforts.