(July 26,2016) According to a just-released nationwide study, only about one in three Americans is financially literate – with a basic understanding of financial concepts such as budgeting, credit and decision-making when it comes to money. The results did not surprise J. Michael Collins, who directs the Center for Financial Security at the University of Wisconsin-Madison. He says so many people struggle to get by in part because they really don’t know much about money, credit and banking. At particular risk are minorities and young people, who were never taught the basics.
The study surveyed more than 27 thousand Americans, measuring their grasp of concepts like budgeting, planning ahead, financial knowledge and financial decision–making.
According to Collins, it’s not that difficult to learn the basic concepts involved in managing income, but some people shy away from it because it involves basic math. He says improving financial literacy is critical to surviving. He thinks one reason two-thirds of Americans are financially illiterate is that the topic of money is often taboo.
Collins says improving financial management is grounded in having a system and paying regular attention to simple financial management tasks such as paying bills on time and saving for retirement. He says improving financial literacy is like diet or exercise. Step one is paying attention and making it a priority.