Americans have a serious financial literacy problem

Everyone understands the value of money. Everyone understands that saving is important. Everyone understands how debt can hurt them… 

Yet financial literacy is one of the hardest things for Americans to tackle and understand. 

Americans have a financial literacy problem.

Through a number of different studies, it’s been found that this financial literacy problem applies to both young and old Americans. Most Americans lack the basic knowledge and skills required to engage in sound financial decision-making, a situation that significantly threatens their financial wellbeing.

What are some of the stats around financial literacy?

Let’s dig in to four of them…

 

1. 77% of Americans are financially anxious

Americans aren’t financially literate and they’re stressed about it. 

Not only do 77% of Americans feels anxious about their money situation, 58% feel that their finances control their lives. They’re worried thinking about retirement, cost of living and overall debt.

 

2. Two in three families lack an emergency fund

It’s said that you should have at least 6 weeks saved for an emergency–better yet to have 6 months saved just to be safe. 

However, two-thirds of American families don’t have anything saved for an emergency and they don’t feel like they even have the bandwidth or capability to do so right now.

This just shows how important it is to have an emergency savings because without it, financial stress skyrockets and the long-term financial health is truly at stake.

 

3. 54% of Americans are living paycheck-to-paycheck

The largest group living paycheck-to-paycheck are Millennials. Typically, we see that those earn on the lower end have a higher chance of living paycheck-to-paycheck, but there are some scattered results

  • Nearly 40% of those with annual incomes over $100,000 live paycheck-to-paycheck, including 12% struggling to pay their bills
  • 53% of those who make between $50,000 and $100,000 annually live paycheck-to-paycheck, with 18% struggling to pay their bills
  • 72% of those who make less than $50,000 per year live paycheck-to-paycheck, with 33% struggling to pay their bills

This is also a major reason why many Americans don’t have an emergency savings fund. They don’t have the means to save when they’re paying bills and sending their money to other more pressing needs.

 

4. 42% of U.S. adults with credit card debt have increased those balances since COVID-19 began

Some blame the pandemic for their increase in credit card debt while others don’t know what to blame.

Credit card debt is something most people have struggled with at some point in their lives. And once you’re in it, it can be really hard to get out of…

In addition to the 42% who have increased their credit card debt, 54% of Americans carry some kind of balance on their credit card. While this isn’t always a bad thing, we know that many have struggled financially because of it.

Again, Millennials and Gen Z tend to be the ones who struggle the most with credit card debt.

 

Becoming financially literate…

Programs focused on financial health are cited by companies as the second to only mental and emotional health.

But financial health and mental health are intricately intertwined. 54% of American workers say finances cause them the most stress. Even more stress than other factors like a job (18%) or health concerns (11%).

Does your organization offer a Financial Wellness Program? If it doesn’t, it should…

To learn more about TrueConnect’s Financial Wellness Platform, let’s schedule a call. Contact us and we’ll reach out to you soon.

 

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