National Financial Literacy Month: Numbers Make the Case

Looking ahead to next month, April is National Financial Literacy Month. Established in 2003, it’s a time for us to understand and improve our understanding of the financial world. Financial education has never been more needed or urgent.

Financial literacy doesn’t just matter to us – it’s the whole reason Financial Poise exists. We long ago recognized shortcomings in how we empower investors, entrepreneurs, and consumers to navigate complex financial spaces. Our goal each day is to change that.

Unfortunately, the numbers do not add up to great odds. As the data shows, improving financial literacy is more than a worthy cause. It’s a national crisis screaming for a solution.

We Don’t Understand Money

There are plenty of national days, weeks, and months that probably don’t require a formal designation or celebration. It’s hard to argue we need something like a National Cheesesteak Day to celebrate the Philly Cheesesteak.

But financial literacy? That absolutely deserves our attention. Consider:

• Over 40%% of adults cannot pass a basic financial literacy test.
• No, seriously – only 36% of adults could solve a basic math problem tied to compound interest.
• 27% of Americans do not think they need a budget.
• 21% of adults do not have any savings.
• Nearly 40% of adults admit to being unable to pay their bills on time.
• 40% of adults do not understand how credit scores are calculated, and only 30% know their personal scores.

This data is both embarrassing and economically dangerous. The trend in financial literacy is not encouraging, either. Academic studies show that financial literacy is actually decreasing.

We’re Terrible at Fostering Financial Literacy

Though research shows financial literacy is low across all generations, our failure to educate young adults compounds the problem. Evidence indicates that early financial education efforts lead to greater long-term financial stability and wealth generation. Despite improvements over the years, the stats concerning early financial education are still nowhere near where they need to be.

• Over 88% of adults believe we should include financial literacy coursework in K-12 education, but still only 26 states require such education for high school graduation (which is an improvement over the last couple of years, but more can still be done)
• While 48% of Gen Z indicate they get their financial education and support from parents, half of parents grade their understanding of finance a C or lower.
• 80% of graduating students wish financial literacy coursework had been a required part of their education.
• Just 1.6% of the federal education budget goes toward financial literacy programming.

We can spend all of our waking hours typing in pursuit of building public financial literacy, but nothing is going to change until it becomes a larger priority. This isn’t a partisan topic. Politics should have no bearing on providing our youth with a solid educational foundation.

Financial Literacy Costs Are Improving, but Still Lacking

The statistics on the current state of public financial education are alarming, but improving.

• 1 out of 3 Americans believe they will never retire due to lack of savings and knowledge.
• 44% do not have enough in the bank to cover an emergency expense of $1,000, down from 56% in 2022.
• Americans lost more than $240 billion in 2024 because of poor financial literacy, down from $400 billion in 2022.
• Only 5% of adults reported losses in excess of $10,000. It’s still not great that 5% of adults are losing money because of financial literacy, but it is down from 15% in 2022.
• Lack of personal finance knowledge costs the average adult over $1,050 a year, which is also down from 1,800 in 2022.
• 90% of wealthy families will lose their wealth within three generations.

That’s just the tip of the iceberg. When you add in the cost of politicians setting fiscal policies and budgets without the financial literacy required to make sound decisions, the price goes up substantially.

Something’s Gotta Give

The math is simple. Financial literacy is critical to individual, national, and global economic health. While things are improving and numbers in significant areas are dropping, it’s still not enough.

If you’re looking for high ROI, investing in financial literacy is the closest thing you’ve got to a sure thing.  Join us next month in that investment. The cost is low, but the benefits are abundant. Let’s get smarter about money together.

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[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can view at your leisure, and each includes a comprehensive customer PowerPoint about the topic):

1. Turning an Idea or Product Into a Business
2. What Every Founder/Entrepreneur Must Know
3. Raising Capital: Negotiating with Potential Investors

This article was originally published on March 31, 2023. This article was most recently updated by the Financial Poise Editors.]

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