We all make money mistakes — some are small, but others are painful whoppers. In many cases, simple ignorance is at the root of our errors.
In 2022, Americans lost an average of $1,819 simply due to financial illiteracy, according to the National Financial Educators Council (NFEC).
In total, it is estimated that the nation’s 240 million adults lost more than $436 billion to this type of ignorance last year.
In arriving at its findings, the council surveyed 3,001 adults and asked one question: “During the past year (2022), about how much money do you think you lost because you lacked knowledge about personal finances?”
The results were as follows:
- 61.8% of respondents: $0-$499
- 7.23%: $500-$999
- 7.96%: $1,000-$2,499
- 7.98%: $2,500-$9,999
- 15.04%: $10,000 or more
In a summary of the study’s findings, Vince Shorb, CEO of the NFEC, says:
“Financial illiteracy is an epidemic in the U.S., and it’s coming at a time when the economic climate is changing rapidly. That means financial education has never been more important than it is today. It’s essential that we help Americans get the personal finance knowledge they need to handle the real-life situations they’re going to face, both now and in the future.”
The NFEC notes that financial illiteracy can hurt people in many ways. Consequences include:
- High loan and credit card interest
- Bank overdrafts
- Identity theft
- Vehicle impoundment
The council adds that the true situation may be worse than its findings suggest, as “people who lack money skills may not even be aware how much it costs them.”
Becoming a money expert
If you want to avoid the costly consequences of financial illiteracy, enroll in the Money Talks News course Money Made Simple.
MTN founder Stacy Johnson offers 14 weeks of lessons on money basics in the course. You will learn how to improve your financial life in all the following areas:
- Budgeting
- Banking
- Credit
- Taxes
- Insurance
- Investing
- Real estate
- Estate planning
After finishing these lessons, you will be ready to manage money more efficiently while spending less time getting the results you want. As Stacy writes:
“Whatever your situation, understanding and learning to control your money is going to improve your life. If you’re rich, you want to stay that way. If you’re not, you want to get that way.”
