Exploring Financial Instability in America through the Lens of Financial Education

Abstract Financial instability in America is a significant problem worth examining because of its vast social costs. People assume that financial education is the antidote to this problem, yet less than half of the states in America mandate it in high school. Using the 2018 National Financial Capability Study (NFCS), this thesis explores the links between financial education and financial instability, using financial literacy as a mediating factor. This research used descriptive statistics to give an overview of all the important variables and logistic regression to test the hypotheses. The results show that financial education and financial literacy are positively related and that financial literacy is negatively associated with financial instability. Policymaking should be aimed at the high school level because that is where most people have access to financial education. This study indicates that financial education is underutilized in America, which has resulted in a vast majority of the population’s becoming financially unstable.