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Financial Literacy When Americans are Failing to Save

Americans are Failing to Save

The recent government shutdown inadvertently made the lack of savings in the US into major headlines. We heard of a tax examiner for the IRS who couldn’t afford to pick up his insulin prescription according to CNBC and a host of GoFundMe accounts used to raise funds during the furlough for government workers. Most Americans can picture how this could happen and know that they would be unable to cope if suddenly faced with an unexpected expense or loss of income.

Forty percent of adults in the U.S. have less than $400 set aside in case of emergency according to the Federal Reserve.

The State of Financial Literacy

April is financial literacy month, prompting us to question how we’re doing with financial knowledge as a country. According to the 2018 TIAA Institute’s GFLEC Personal Finance Index, Americans are failing personal finance. When tested on basic finance knowledge, test takers did the best in “Borrowing,” answering 60% of the questions right – which would still be a failing grade in most classrooms. The results only worsened from there on everything from “Saving” to “Investing” and, worst of all, “Comprehending Financial Risk,” at 35% correct.

Increasing Financial Responsibility

According to a new CNBC Invest In You and Acorns Savings Survey, more than 75% of Americans are managing their finances without any help from financial experts. While the DIY movement may seem savvy when it comes to home improvement, it may be riskier in the finance sector, with impacts lasting decades. Americans are making serious financial decisions as soon as they become adults, often borrowing significantly to pay for their education. They are also increasingly being left to manage their own retirement savings in the absence of workplace plans.

Filling the Financial Literacy Gap

Getting Americans the financial knowledge they need can be a challenge, but there are a host of tools available, from podcasts to YouTube videos, to educate yourself. Our LiSA Initiative has aggregated resources to prepare for your financial future. Certified LiSA instructors bring our financial literacy curriculum to life in classrooms across the country, breaking down financial concepts into easy-to-manage lessons.

Americans were faced with the stark reality of their financial vulnerability when over 800,000 Americans were suddenly left without a paycheck and with grim financial prospects in 2018 and 2019. Taking control of your future and ensuring that you and your family understand core financial concepts is the first step toward gaining control of your finances.


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