According to CNBC, a lack of financial literacy cost 15 percent of adults at least $10,000 in 2022. The average cost, according to the nonprofit National Financial Educators Council, of financial literacy to individuals in 2022 was $1,819.
How much has your financial literacy or lack thereof cost you in the past year?
The average score on the NFEC financial literacy test, among ages 15-18, is 63.8 percent, with 51.9 percent of test takers failing (score of under 70 percent). When all ages are combined, the average score only increases slightly to 57.4 percent, with 42.7 percent failing. How do you think you would score?
Financial literacy has a huge impact on your financial future. If you want to find out if you are as financially literate as you believe, I encourage you to go to www.financialeducatorscouncil.org/financial-literacy-test/ and take the complimentary financial literacy test. It could be quite illuminating.
I believe your financial literacy or illiteracy not only impacts your future but also is a large part of your financial legacy. Did your parents ever talk to you about money? If you have children, how often do you talk to them about money?
If your goal is to have financial wisdom and to be financially literate, here are a few questions to ask yourself.
- If you need financial wisdom or advice about money, where or to whom do you turn?
- Are the people or sources you turn to financially successful?
- Do they address your specific situation?
Information found online or shared by someone on TV or radio is general information and may not be the right advice for you. Seek help for your specific situation.
What do you consider and to what do you give weight when you are making a financial decision?
Is it how much you want something like a new car, boat, clothes, house, etc., or is it the immediate and long-term financial consequences you consider? Can you explain your decision to yourself in rational, non-emotional terms?
Address your financial regrets; don’t ignore them and pretend they didn’t happen.
If you could go back in time, what would you do differently? What would you tell your younger self about money and financial wisdom? Make the necessary changes so your future self will have a better financial future.
Do you have a budget, emergency fund, savings, or retirement account?
If not, I encourage you to choose self-discipline and start now. If your money is tight, start small. Compound interest either works against or for you – against you with debt, and in your favor with long-term savings or investments.
Am I grateful for what I have, or do I always want more?
While it is normal to want more money, stop and consider your attitude toward money. Does your desire for more money have a positive or negative impact on your life and the lives of those your love? Does it drive you to make an unhealthy lifestyle or emotional choices? Money is not evil; however, the love of money has destroyed many lives.
According to Dr. Kevin Elko, there are two pains in life: the pain of regret, and the pain of discipline. Obtaining and walking in financial wisdom requires discipline but brings with it the ability to look back without regret and a leave financial legacy to be proud of.