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South Dakotans Rank Third In Financial Literacy

My friends around the country claim I am a traveling Chamber of Commerce. They say I am often caught articulating the virtues of South Dakota.  Maybe so.  Well, here’s another factoid my friends around the country will soon be learning about.  

According to a recent survey, it seems the fine residents of the State of South Dakota had the third highest financial literacy scores of any other state in the nation.  First was New Hampshire and second was Minnesota. That means the residents of 47 other states (including New York, California, and Texas) are a bit more financially challenged than those of us living in fly-over country.  That must sting a bit for some of my buddies in other states. 

Which begs the question, why are Dakotans are so intellectually savvy?  Could it be that for the past ten years one-fifth of the adult population of South Dakota can read my weekly column in their local paper?  I doubt it, but it’s an interesting question to ponder, especially in light of this next fact that I was going to conveniently not include in this post until my wife shamed me into including it.

So, here’s the rest of the story.  If South Dakotans are so smart, why are they also the fourth highest in the country when it comes to overpending?  Yes, sadly, 64.2% of South Dakotans spend more than they make.  So, what’s the deal?  Some suggest it’s because our wages are lower than most parts of the US and our expenses higher.  While I am unsure of the reason, the simple fact is South Dakotans have a huge disconnect between what they know they should do financially and what they actually do.

Here’s an interesting column that ran in the Sioux Falls Argus Leader on the study.

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5 Responses to South Dakotans Rank Third In Financial Literacy

  1. Dave Jetson January 6, 2011 at 8:06 am #

    The disconnect is related to being disconnected from the feelings, which messes up the logic.

  2. Joanne Goodrich January 6, 2011 at 8:13 am #

    The hand to mouth thing could be explained by a lot of transient workers in SD. Read “Nickel and Dimed” by Barbara Ehrenreich to see what happens when underemployed people try to move to another town or state. They are immediately in the hole because they can’t rent an apartment and usually don’t have a car. We also have the Native American population. I think our financial literacy score can be attributed to our parents’ examples and stories of The Great Depression’s effects. I know Gary and I are frugal and can trace a lot of the things we do to parental memories. And we’re happy to be this way!

  3. Rick Kahler January 6, 2011 at 8:14 am #

    I am reminded that “knowing” isn’t to be confused with “doing.”

  4. Larry January 6, 2011 at 9:04 am #

    I read the article but couldn’t find the study. The article stated those South Dakotans live paycheck to paycheck. If you read the study and it said we spend more that we make that is one thing but if you are basing your comment on the article you have made a huge assumption. South Dakota ranks among the top 3 states for average credit scores. ND, SD and MN all have average FICOs that hover around 720. I could believe some consumers could overspend and still maintain great scores but I would have a hard time believing more than half of all South Dakotans could pull that one off.

  5. Rich Colman January 6, 2011 at 9:23 am #

    Rick:

    I think your columns, blogs and seminars have probably reached enough people in SD to raise the financial literacy for your state!

    Rich