Kids today are learning lots earlier than ever before: 2-year-olds are using iPads, 4-year-olds can read and if you can’t figure out how to program the DVR, call your 8-year-old.
But few of us at any age, it seems, are financially literate.
That’s what Wallet Hub found when it analyzed consumer habits, financial education programs and the results of its own WalletLiteracy Survey, and then ranked them by state. The survey asked questions gauging understanding of everyday financial concepts, such as what your car insurance covers and how much your credit card interest really costs you.
Some 40% of U.S. adults gave their financial knowledge a grade of C or worse. That’s bad, but even that lowly mark might be overly optimistic. Combining the survey scores, consumer habits and education, no state earned a score of even 70% (does that sound like a passing grade to you?). A dozen states didn’t even score 60%.
What’s this lack of financial aptitude costing us? $153 billion in new credit card debt since the beginning of 2012, for one thing. Card Hub projects we’ll end the year with roughly $1 trillion in outstanding balances for the first time ever. The average indebted household will owe more than $8,500 in credit card debt.
Which may be the reason nearly half of American consumers say they don’t have the cash to cover a $400 emergency, according to a recent report in The Atlantic magazine. 47% of respondents to a Federal Reserve Board survey said they’d have to borrow or sell something, or just couldn’t do it at all.
That’s a lot of us living very close to the financial edge. If you’re one of them, take action.
- Get help. Take advantage of free credit counseling services.
- Create a financial safety net. Be sure you have insurance to protect your income (protect your income for WorkWell) and limit your exposure to unexpected medical costs. (unexpected medical costs for WorkWell)
- Improve your financial literacy. Read and ask questions to learn how to take control of your money.