Here’s one simple solution to helping Americans manage their money

When it comes to teaching Americans about money, a video could be a worth a thousand words.

Videos may help improve Americans’ woefully inadequate financial literacy and ensure people make better financial choices, according to a new report by researchers at UCLA and Carnegie Mellon published in the journal Management Science.

The research comes as consumers are turning to internet videos more than ever to learn how to do everything from applying eyeliner to treating a dislocated shoulder. YouTube GOOG, -0.27% has become a major outlet for self-education, the researchers said, citing a 2013 study that showed 50% of adult internet users watched educational videos and 30% posted educational videos of their own.

People around the world watch almost six hours of online videos a week, up 34% in less than a year, according to content delivery network Limelight Networks’ State of Online Video study from 2017. Viewers 18 to 25 years old watch more than seven hours a week, and 25% of that age group watch more than 10 hours a week.

Online videos could be a “powerful channel” for government agencies and nonprofits that want to help consumers make better financial decisions, the researchers noted.

But there’s a caveat. People may not be willing to learn or share the content if it appears too complex. The videos would need to have some practical use, and viewers have to feel that the information they’re learning about through videos can be implemented. To test this, the UCLA researchers created two two-minute videos about various types of credit cards.

Both videos contained three messages: “Beware card fees,” “A fixed interest rate may not always remain unchanged,” and, “A card with no spending limit will still have an overall limit that could trigger fees.” Of the 1,600 people between 18 and 80 years old who watched the videos, 75% had at least one credit card.

More people made the best decision on which credit card to choose after watching the video with the practical “how to” advice.

Americans are not well versed in financial literacy, possibly because it is not taught in most public schools. Only five states required high school students to take a class about money as of 2015, which can lead many students to head off to college without any basic understanding of credit cards, student loans or saving and investing.

In a global study of 15-year-old students’ knowledge in science, math, reading and personal finance, American teenagers received average scores and didn’t even crack the top 5 countries (China was No. 1, followed by Belgium and Canada.)

Only 3% of American students from lower-income schools received top marks in the personal-finance assessment, compared to 45% of teens from higher-income schools.

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