Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
10 Eye-Opening Financial Literacy Statistics
OppU | Samantha Rose | Mar 18, 2021
The data speaks for itself — and it’s not good.
The data is clear. Americans have a financial literacy problem.
Fortunately, there’s also reason for hope. People want to make smart financial decisions — even if they can’t always do it. They understand the importance of financial literacy to create success and financial stability.
We reviewed the latest reports to better understand the state of financial literacy in America. The statistics that emerged offer a glimpse into how well-equipped we are as a country to manage our money. Some speak to our understanding of personal finance, others to how well we follow through on them.
It’s important to note that a majority of these studies were conducted prior to the coronavirus pandemic. A lot has changed, but the data offer a snapshot of our financial health, and how well prepared we were to weather what has become a historic economic crisis.
See: Fintech Startup WALO Goes Live With A Gamified Financial Literacy App for Kids and Parents
Here are 10 statistics that illustrate the state of financial literacy in America.
No. 1: 53% of adults are financially anxious
It turns out many Americans aren’t financially literate. And they’re stressed about it.
In fact, a 2018 FINRA study found financial capability, stability, and confidence aren’t improving. Over 53% of adults say thinking about their financial situation makes them anxious. Forty-four percent say discussing their finances is stressful.
Younger Americans are feeling the greatest burden. The study found persisting and widening gaps between those who are struggling and those who are prospering financially — skewing generationally. Those between the ages of 18 to 34 have the highest levels of financial stress (63%) and anxiety (55%).
The study was conducted during a period of economic growth and declining employment — two factors heavily impacted by the current pandemic. It’s likely that these figures have only grown worse.
No. 2: Two in three families lack an emergency fund
According to an analysis from JPMorgan Chase, a majority of families in the U.S. don’t have enough money saved in an emergency fund.
FFCON21 On-Demand Video: How Fintechs are Solving Canada’s Financial Health Challenge
The research recommends families aim to save at least six weeks of take-home pay. This is a departure from the traditional recommendation of saving three to six months’ worth of take-home pay. The reasoning is that a smaller buffer can help families weather a financial upset, such as a reduction of wages or a spike in expenses.
Even so, about two-thirds of American families would struggle to come up with the equivalent of six weeks’ savings. A tremendous percentage of the population is at risk. With financial ruin one unexpected expense away, this statistic emphasizes how critical building an emergency fund is for long-term financial health.
No. 3: 78% of adults live paycheck to paycheck
According to a 2017 CareerBuilder survey, the majority of the country is living paycheck to paycheck. Living paycheck to paycheck means you are spending most or all of your monthly income on expenses. Once essentials are paid, there’s no money left over for savings.
Americans stuck in a hand-to-mouth cycle often feel limited by their financial situation. If savings run out, what’s their Plan B? For many Americans, there isn’t one.
We’re seeing this play out across the nation. Given the current economic downturn due to the pandemic, the number of Americans struggling to make ends meet is likely exacerbated. Jobless claims now total 33.5 million Americans. At a time like this, the stark statistic hits close to home.
No. 4: Three in five adults don’t keep a budget
In 2019, a survey revealed two in five U.S. adults said they have a budget and follow it to keep track of spending. But the survey also revealed three in five U.S. adults self-reported that they do not budget.
See: Renewing the National Strategy for Financial Literacy
Maintaining a budget is a financial literacy fundamental. A budget sets the foundation for how to treat income and expenses. It ensures that needs are covered each month — essentials, like bills, debt, and savings.
It’s eye-opening to learn a majority of Americans abstain from this financial literacy basic. Without a budget how do consumers maintain confidence in their financial stability? How do they hold themselves accountable when managing money?
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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