Financial Illiteracy Is Really Costing Americans
Financial Illiteracy Is Really Costing Americans
Making money is only half of the story. Knowing what to do with your hard-earned income is a whole other part of it, and Americans are learning this the hard way.
According to the latest National Financial Educators Council (NFEC) report, American adults lost an average of $1,819 in 2022 due to personal financial errors, which adds up to a total loss of $436 billion across 240 million people. Such data demonstrates the need for better financial education among today’s working population.
Vince Shorb, the CEO of the NFEC, told Yahoo Finance that financial illiteracy is an epidemic in the U.S. that is rising at a time when the economic climate is changing rapidly. “That means financial education has never been more important than it is today,” he adds.
Financial illiteracy has been a problem since 2017; however, it was not until the COVID-19 pandemic hit three years later that the issue truly started to become concerning. Losses related to financial illiteracy grew to a staggering 27.7% in 2020 due to pandemic panic, and in 2022 that number rose to 31.6% due to additional economic challenges such as inflation.
"People weren't prepared for the rapid increase in the cost of food, gas, and other necessities in 2022. Many people that were just getting their finances back in order after COVID times are now back to struggling to make ends meet," explains Shorb.
Based on the NFEC's analysis, three of the most common personal financial errors contributing to these numbers include: 1) carrying balances on credit cards with high annual percentage rates, 2) overspending on luxury goods despite not having the budget for them, and 3) being too lenient with overdraft fees.
It can be easy to fall into the trap of diving into one's credit; but with proper budgeting and some self-control, Americans in tough financial situations can work their way out of a financial hole in time.
“Many of us have gaps in our financial knowledge that can be costing us money,” says Shorb. “Identify areas that are taking you further away from your financial goals and dedicate time weekly toward addressing those areas.”
Source: 1
READ MORE
As the crisis continues, airlines are hemhorraging money. Will airlines survive this crisis? And if so, how?
If you're looking to expand your buying power, you need to check out the best credit cards of 2020. You won't believe some of these extras!
Whether it's an incompetent client or an unhinged attorney, these lawyers' stories of their most outrageous plot twists had us banging the gavel.
There is a reason why shows like Gray's Anatomy and ER are so addictive: Hospital drama is insane, and not just on TV—that stuff happens in real life, too.
Courtroom cases can take months or even years to go in front of a judge. Then, in the blink of an eye, it can all unravel spectacularly.
On TV, courtrooms seem like well-oiled machines. In real life, though? Not so much. These court cases are wild rides from start to finish.
Disclaimer
The information on MoneyMade.com is intended to support financial literacy and should not be considered tax or legal advice. It is not meant to serve as a forecast, research report, or investment recommendation, nor should it be taken as an offer or solicitation to buy or sell any securities or adopt any particular investment strategy. All financial, tax, and legal decisions should be made with the help of a qualified professional. We do not guarantee the accuracy, timeliness, or outcomes associated with the use of this content.
Dear reader,
It’s true what they say: money makes the world go round. In order to succeed in this life, you need to have a good grasp of key financial concepts. That’s where Moneymade comes in. Our mission is to provide you with the best financial advice and information to help you navigate this ever-changing world. Sometimes, generating wealth just requires common sense. Don’t max out your credit card if you can’t afford the interest payments. Don’t overspend on Christmas shopping. When ordering gifts on Amazon, make sure you factor in taxes and shipping costs. If you need a new car, consider a model that’s easy to repair instead of an expensive BMW or Mercedes. Sometimes you dream vacation to Hawaii or the Bahamas just isn’t in the budget, but there may be more affordable all-inclusive hotels if you know where to look.
Looking for a new home? Make sure you get a mortgage rate that works for you. That means understanding the difference between fixed and variable interest rates. Whether you’re looking to learn how to make money, save money, or invest your money, our well-researched and insightful content will set you on the path to financial success. Passionate about mortgage rates, real estate, investing, saving, or anything money-related? Looking to learn how to generate wealth? Improve your life today with Moneymade. If you have any feedback for the MoneyMade team, please reach out to [email protected]. Thanks for your help!
Warmest regards,
The Moneymade team
