Hi Dreamers,

Today is the two year anniversary of the D.R.E.A.M. Blog!!! It feels like just yesterday I was sharing the story about how the organization was founded. Over the last two years our blog has provided information on a host of financial literacy topics. We hope that you have learned a lot along the way. We look forward to continuing to be a leading source of personal finance information.

In celebration of our anniversary, I want to unveil something I have been working on for some time; our first annual financial literacy rankings by state. Our team has been digging through the data to determine what states have the highest financial IQ. Our rankings aim to provide an independent assessment of the state of financial literacy in America.

Inside the Rankings

We keep our data as objective as possible to provide our readers with an unbiased opinion. Our rankings and research highlight that although financial literacy is largely determined by individual demographic characteristics it may also be shaped by the state in which people reside.

Interesting results, four of the largest states, based on population, did not make the top 10: California, Florida, New York, and Texas. Also, states in the South and Midwest accounted for majority of spots in the top 10. Moreover, despite having a high density of wealth and some of the richest zip codes per capita, there was only one state in the Northeast represented on our top 10 list, New Jersey.

Alarmingly, 26 states currently have no education policy in place that includes financial literacy or personal finance education. Meanwhile, only 4 states mandate a designated personal finance or financial literacy course for high school graduation.

Behind the Numbers

Our rankings were derived using a proprietary formula which analyzed education policy in each state in addition to other metrics that measure one's financial literacy and financial behavior. (Let's face it, merely knowing the right financial practices is useless unless you are actually employing the knowledge)

We began with data from all 50 states. Our rankings measure states in three broad categories: Policy (33%), Literacy (26%), and Behavior (41%). Here's how the numbers break down:

State Policy: 33%

We analyzed each states financial education policies utilizing information from the Jumpstart Coalition for Personal Financial Literacy and state government sources.

Financial Knowledge: 26%

We utilized the results from a financial literacy quiz administered to persons in all 50 states by the EBRI.

Financial Habits: 20%

Our research included analysis of results from a questionnaire administrated to persons by the EBRI regarding their financial practices.

Banking: 13%

We utilized data from a study conducted by the FDIC analyzing national banking sector participation.

Credit Card Debt: 7%

We analyzed data from one of the three major credit score bureaus to identify the average level of indebtedness per state resident.

D.R.E.A.M's Top 10 States for Financial Literacy

10. Illinois

The home state of President Obama has an $5,166 average amount of credit card debt per resident and an 93.9% banked population.

9. Indiana

The home of the famous Hoosiers has an $4,577 average amount of credit card debt per resident and an 93.9% banked population.

8. Kansas

Kansas residents ranked 12th on a national financial behavior survey and have an average amount of credit card debt of $4,830 per resident.

7. Missouri

One of four states that mandates a personal finance or financial literacy course as a prerequisite for high school graduation. State residents have an average of $4,796 of credit card debt.

6. New Jersey

The only state in the northeast to make it into the top 10. Residents ranked 6th on a national financial behavior survey.

5. South Dakota

State residents ranked 3rd on a national financial literacy quiz. The state is also home to a 95.6% banked population.

4. Virginia

One of four states that mandates a personal finance or financial literacy course as a prerequisite for high school graduation. The state also has an unbanked population of only 6.6%.

3. Idaho

Idaho residents ranked 4th on a national financial literacy quiz and 7th on a national financial behavior survey.

2. Colorado

State residents ranked 6th on a national financial literacy quiz and an impressive 4th on a national financial behavior survey.

1. Utah

One of four states that mandates a personal finance or financial literacy course as a prerequisite for high school graduation. The state also boasts an impressive 97.2% banked population and ranked 2nd on a national financial behavior survey.

Thank you for reading the D.R.E.A.M. Blog

Stay tuned as we will reveal the Top 10 Worst States for Financial Literacy!

About the Author: Femi Faoye is the Co-Founder and Chief Executive Officer of D.R.E.A.M. He's also the Founder of Millennial Capital Management, an investment management firm based in New York City. He’s a staunch and passionate financial literacy education advocate.

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