Imagine driving a car without a basic understanding of the rules of the road or even how to operate it. Scary thought.
Here’s another scary circumstance – one that is all too real. Many Americans are making financial decisions with minimal financial knowledge of investing, budgeting, and credit. The TIAA Institute conducted a survey on U.S. financial literacy, asking 28 basic questions about retirement savings, debt management, budgeting, and other financial matters. The average respondent answered only about half of the questions correctly.1
Another recent survey conducted by the Census Bureau found that almost 40% of Americans say that it has been somewhat or very difficult to pay for usual household expenses in the last seven days.2
It has been said that knowledge is power, and if that’s true, then too many Americans lack the power to control their financial futures. Financial success rarely happens by accident; it is typically the outcome of a journey that starts with education.
One of the obstacles to greater financial literacy is the so-called “Lake Wobegon effect.” In other words, we all consider ourselves above average, and based on that belief, it only follows that our financial understanding is above average. Unfortunately, this assumption is flawed: it may discourage us from learning as much as we need to in order to continue adapting to an ever-changing financial world.
The more informed we are, the better our financial decisions should become. The first step is to admit that we are not experts and could use some help. Fortunately, we can consult a wide range of resources in pursuit of greater financial knowledge.
If you are committed to increasing your financial literacy, think about turning to financial professionals with your questions or visit a U.S. Treasury-sponsored website created for that very purpose.3 If your interest is in learning about stock investing you can get printed information from any broker, the NYSE or NASDAQ exchanges, or join Simply Wall Street online and ask questions.
If you want to talk, I'm available to help. Feel free to call to set a time and place -- (302) 856-2734.
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1.TIAAInstitute.org, 2022
2. Census.gov, 2023
3. MyMoney.gov, 2023