The estimated average amount of money that lacking knowledge about personal finances cost people was $1,819 in 2022In their annual financial illiteracy report, the National Financial Educators Council looks at the definition of financial literacy and the cost of financial illiteracy on different areas of people’s lives. Review the full data and download the annual financial illiteracy report here.
DALLAS, Jan. 11, 2023 /PRNewswire/ — Americans today must navigate an increasingly complex economic world, requiring a new set of key money management skills. And financial illiteracy – the lack of vital personal finance knowledge – costs people money.
How much? That’s what the National Financial Educators Council (NFEC) seeks to clarify with its annual financial illiteracy survey. In 2022, the survey was conducted from October 23, 2022, to December 5, 2022, with people across America. A total of 3001 participants responded to one question: “During the past year (2022), about how much money do you think you lost because you lacked knowledge about personal finances?”
- 61.8%: $0 – $499
- 7.23%: $500 – $999
- 7.96%: $1,000 – $2,499
- 7.98%: $2,500 – $9,999
- 15.04%: $10,000 +
The NFEC then calculates the average amount people estimate they lost due to lack of financial knowledge. This year, the average was $1,819. When we extend that figure to represent trends among all 240 million U.S. adults, the estimated total lost money caused by financial illiteracy totaled over $436 billion in 2022.
Additional results indicated that over 38% of survey respondents said financial illiteracy cost them more than $500 last year, while 23.02% reported losing over $2,500. The NFEC reach these findings by averaging the total number of participants who select each response choice, using the lowest number in each range.
The Epidemic Of Financial Illiteracy
“Financial illiteracy is an epidemic in the U.S., and it’s coming at a time when the economic climate is changing rapidly,” comments Vince Shorb, CEO of the NFEC. “That means financial education has never been more important than it is today. It’s essential that we help Americans get the personal finance knowledge they need to handle the real-life situations they’re going to face, both now and in the future.”
The NFEC has conducted this survey annually since 2017 as part of its ongoing research efforts to illuminate the true costs of financial illiteracy. These statistics underscore the importance of addressing the problems caused by lack of financial knowledge.
The previous year’s survey – 2021 – showed that, on average, Americans lost $1,389 due to financial illiteracy. In 2022, the average jumped to $1,819 – this is the highest average since the first annual survey took place 6 years ago.
Lacking financial education leads to a host of real-life consequences that can include high loan and credit card interest, bank overdrafts, identity theft, and vehicle impoundment. Further, the data reported here may represent an underestimate of actual losses due to financial illiteracy, as people who lack money skills may not even be aware how much it costs them.
About The National Financial Educators Council
The National Financial Educators Council (NFEC) is an IACET Accredited Provider of financial education and a Certified B Corporation. The organization promotes financial wellness by spreading educational resources and conducting nationwide advocacy. The NFEC’s research efforts seek to characterize the financial health of individuals in the US and abroad. Results of previous research have found strong associations between people’s financial behaviors and attitudes and their personal finance capabilities.