How many adults don t know financial literacy?
U.S. adults have big gaps in their financial knowledge
The consequences of not being financially literate can be costly. In fact, Americans estimated they lost an average of $1,819 in 2022 due to lack of knowledge about personal finances, according to a study by the National Financial Educators Council.
In fact, 88% of all Americans said high school did not leave them “fully prepared” for handling money in the real world. This lack of personal finance education in high school has understandably lead to stress over managing finances for all Americans.
According to the US National Association of Plan Advisors (NAPA), Gen Z has the lowest level of financial literacy, with only 28% of questions being answered correctly on average.
75% of American teens lack confidence in their knowledge of personal finance. 25% of Americans say they don't have anyone they can ask for trusted financial guidance. 23% of U.S. adults ages 18 to 29 have credit card debt that's over 90 days overdue. Americans owe over $1.03 trillion in credit card debt as of Q2 2023.
Almost 40% of American adults report they struggle to make ends meet each month, an increase from 34.4% in 2022 and 26.7% in 2021.
Only 24 percent of respondents showed basic financial literacy in the study, with just 8 percent showing a high level of knowledge. Yet, 69 percent gave themselves a high self-assessment of financial knowledge. “What young adults don't know about money can hurt them,” says Beck.
Financial Illiteracy Cost Americans $1,506 in 2023. Lacking financial literacy and not knowing how to manage one's personal finances carried a high cost in 2023. The NFEC conducted a survey asking American adults to estimate how much money they had lost during the year due to lack of financial knowledge.
We don't have enough instructors to teach finance classes (see reason #1) Personal finance isn't part of the ACT or SAT – if it's not tested it's not taught. Education is up to the states, not the feds, and each state has different ideas. There isn't much agreement as to which finance concepts would be taught.
Financial literacy tends to be low within each of the five generations, but particularly so among Gen Z. Two-thirds of Gen Z could answer only 50% or less of the index questions correctly.
How hard is financial literacy?
Fewer than half are passing a basic exam on financial literacy—and the average test taker only answered 63% of the questions correctly!
Higher debt and bankruptcy rates for people with limited financial knowledge who are more likely to make poor borrowing decisions. Again, higher bankruptcy rates and loan defaults can not only affect individuals but have negative effects on the financial system.
Financial literacy tends to be low within each of the five generations, but particularly so among Gen Z. Two-thirds of Gen Z could answer only 50% or less of the index questions correctly. Within Gen Z, financial literacy tends to be lowest among those who have never attended college.
Boomers—born between 1946 and 1964—are currently the wealthiest generation on the planet.
CHARLOTTE, NC – Today, 85% of Gen Zers cite one or more barriers to achieving financial success. Topping the list is the higher cost of living, cited by 53% of respondents to Bank of America's annual Better Money Habits survey (PDF) .
“If you don't understand the language of money, and you don't have a bank account, then you're just an economic slave.” “The widespread deficit in financial literacy has raised a good deal of concern among government agencies, policymakers, and leaders in the community and business sectors.
17% of Americans were Financially Vulnerable in 2023, an increase from 15% in 2022. The share of Americans who were Financially Healthy or Financially Coping did not meaningfully change over the last year.
Overall, 46% of Americans said they have not made any financial advances since inflation hit a historical high two years ago, according to the survey. Of those not making progress, 36% said they had fallen behind on savings or goals and 66% had no written financial plan.
Nearly 2 in 3 Americans (65%) had to put off a major financial milestone in 2023, with 28% of Americans putting off taking a vacation, 21% putting off buying a car or paying off credit card debt, 18% putting off starting an emergency fund and 17% put off contributing to their retirement savings.
Gen Zers are cutting back on spending. More than half, 53%, say a high cost of living is a barrier to their financial success, according to a new survey from Bank America. Nearly 3 in 4 young adults surveyed, 73%, have changed their spending habits amid record-high inflation.
Which generation has it the hardest financially?
Gen Zers are having a harder time making ends meet, let alone building wealth. Roughly 38% of Generation Z adults and millennials believe they face more difficulty feeling financially secure than their parents did at the same age, largely due to the economy, according to a recent Bankrate report.
“The reason that millennials don't save as much as Gen Z is likely because they have more financial responsibilities,” Adams said. “For instance, many are homeowners, have families and pay higher ongoing expenses, such as groceries, clothing, insurance and medical costs.”
Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Nearly one in four (22 percent) U.S. adults said they have no emergency savings.
Personal Savings in the U.S.
According to a rolling representative online survey among U.S. adults by YouGov, 27 percent of Americans had some savings below $1,000 as of May 2023, while 12 percent said they had no savings at all.
"Our research shows an economic divide that is widening among Americans — there is a large group of hard-working people who are still struggling financially,” Eric Dunn, CEO of Quicken, said in a press release.
