Personal finance is important for everyone, yet many Americans lack basic financial literacy. Understanding basic money management skills and applying those to your life might be more important than you think. Because of this, many might not be aware of the problems they could face. Some might not know where to start to get better at handling money.
When it comes to personal finance, some people think they are good at it. I feel that way, and I am aware of my finances; this is also because of my program and interests, Economics and Pre-Business. However, statistics show that few Americans have financial literacy.
According to the Financial Educator Council (FEC), a financially uninformed individual may overspend beyond their means, might not save enough for their retirement and could make choices that feel good in the short run but have detrimental effects long term. The FEC also says that financial literacy test failure rate is over 60% in the United States. Furthermore, the statistics for teenagers are even more alarming. According to Forbes, over 70% of teenagers do not have a savings account or understand their personal finances.
The statistics did not surprise me. Sometimes statistics are just like proof of our real-life experience. Take my friend for example. He moved out of his parent’s house for college when he was in his late teens. He was working and studying at the same time. He worked part-time without saving or creating any kind of emergency fund for unexpected expenses. Sadly, he had poor financial knowledge, and this hurt him when he had an unexpected car repair. If he had some financial knowledge or at least basic money management skills, he might not have had to financially struggle during that unexpected expense.
Moreover, the importance of personal finance skills can cost Americans a lot more than you might think; according to the FEC website, the average financial illiteracy cost to Americans is over $1,000 per year. Educating yourself is the most important step to start improving your skills. Taking a step and following through might put you in better shape with money management skills. If you want to start educating yourself, using the services that are offered by Extension Dane County University of Wisconsin-Madison might be a good idea. They offer services like tax preparation, retirement planning and financial coaching at little to no cost.
In conclusion, the statistics are clear about financial literacy. Poor financial planning and not having the basic skills of money management might put you in a tricky situation during certain times. Therefore, you should get the right finance, tax or retirement coaching before it is too late. Extension Dane County UW-Madison might be able to help you with that. More information about the services offered at Extension Dane County UW-Madison can be found on their website: dane.extension.wisc.edu.