Check out Kathleen Craig’s ABA Bank Marketing Article.
As a former banker, financial literacy is a topic I’m passionate about because a lack of financial knowledge affects people’s personal finance in impactful ways. According to a new survey from the National Financial Educators Council, a lack of personal finance knowledge costs an estimated average of $1,389.06 per individual, or $352 billion total in the U.S. each year. Additionally, nearly 20 percent of respondents said they lost over $2,500 last year due to gaps in knowledge.
Without a solid understanding of finance, individuals are at a higher risk of going further into debt. Nearly two-thirds of American families do not have the equivalent of six weeks’ savings and 78 percent of adults live paycheck to paycheck. This is putting them at risk for financial ruin if faced with an emergency. When asked how they would handle an unexpected expense, one in four said they would charge the expense to a credit card or take out a loan, adding to their debt.
Meanwhile, debt levels have continued to climb. The national student loan debt topped $1.6 trillion this year with just under 44 million borrowers. Household credit card debt is also rising, seeing its largest quarterly increase in at least 22 years, now at $860 billion, according to the New York Federal Reserve.