Financial literacy is all the rage these days, with states like Florida becoming one of the newest and biggest states to mandate personal finance courses for high school students. That’s probably a good thing, too, because nearly every worker in the United States is stressed about money and a possible recession is looming.
Yet even after some financial restrictions and having obviously learned to live on less during the pandemic, many Americans may be less equipped to manage their finances than they were a year ago, according to data from the BrightPlan 2022 Wellness Barometer survey. which interviewed 1,500 people. knowledge workers in the United States
A particularly worrying finding? Only 13% of workers were able to correctly answer at least four of the following five financial literacy questions:
- You have to pay credit cards every month.
- Funds are taken to a debit card immediately.
- 15-year mortgages require higher monthly payments which reduce total interest.
- Credit card interest is the price you pay to borrow money.
- 401(k) contributions are not taxed until withdrawn.
All of the above questions are true. A year ago, in 2021, 20% of workers were able to answer four of these five questions correctly, a year-on-year drop of 7%. Sixty-one percent of respondents were able to answer correctly that they should pay off their credit cards each month — the most correctly answered question — while only 41% could correctly say that 401(k) contributions are taxed when removed.
In addition, the survey reveals that more employees are stressed about their finances, and that this stress is mainly due to inflation and worries about planning for retirement. While no personal finance course can lower the price, deepening financial literacy might help some people learn how to better deal with the stress of financial planning.
The survey results – which, again, show an apparent decrease in respondents’ ability to answer financial questions correctly – are apparently at odds with the growing opportunities to learn more about money. Financial courses are more available than ever and are now mandatory, in one form or another, in 25 states.
While this is just one data point from a single survey, it may be an embarrassing sign, given that we are on the brink of an apparent economic downturn, corporate earnings reports showing that retailers are suffering due to rising costs, some employers layoffs and markets in relative free fall since the start of the year.
An economic downturn, coupled with a financially unprepared population, could be disastrous, especially since there may not be significant stimulus programs in place to help keep households afloat financially. after the government pulled out all the stops during the pandemic.