Financial Illiteracy May Cost Average American $1,634

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That’s how much, on average, Americans think they lost in 2020 because they didn’t know enough about personal finances, according to a survey.

The findings of the survey, done annually by the National Financial Educators Council, implies more than $415 billion in costs to the country overall, according to the group. While the question asked in the poll didn’t mention specific shortfalls in knowledge, accumulating interest-bearing debt, misusing credit cards, and not saving enough were some of the pitfalls the council said constitute a financial illiteracy “epidemic” in the U.S., causing increased bankruptcy filings and a lack of retirement preparedness, among other things.

The average annual estimate of loss has risen every year since the council started the survey in 2017, and jumped from $1,279 per person in 2019.

The latest survey, conducted between Dec. 31 and Jan. 3, was included in a report card on financial literacy released this week by the American Public Education Foundation, which graded each state’s financial literacy requirements and standards for Kindergarten through 12th grade. If schools don’t step up to teach basic financial literacy skills to kids, the economy as well as people’s health will suffer, the foundation said.

“Each year, Americans graduate high schools without knowledge of the most basic and crucial of life skills: how to keep a budget, file taxes, open and maintain a bank account, and save for retirement,” the foundation said in the report card.

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Article Sources

  1. National Financial Educators Council. “Financial Illiteracy Cost Americans $1,634 in 2020.”

  2. American Public Education Foundation. “The Nation’s Report Card on Financial Literacy.”