Financial ignorance isn't bliss - it's expensive. How much the average cost of financial uncertainty is per person:
Bottom Line: I often state that there are two sides to every story but just one side to every fact. That came to mind as I waded into the latest financial literacy report from the National Financial Educators Council. It's not news or new information that about half of all adults are less than 50% financially literate. It's also not news that most people want more money. Here's where my opening thoughts come into play. There are two ways to obtain more money (legally). Earn more money or make better use of the money you already have. Often when the thought of making better use of money comes to mind - it's met with thoughts of savings and sacrifice. A couple of words that aren't often associated with positive thoughts - especially by those who tend to lack financial literacy. This story isn't about savings and sacrifice. It's about the cost of not being financially literate to you.
- According to a 3,000 person study by the National Financial Educators Council:
- The average person has lost $9,725 due to a lack of financial literacy
- 25% had lost $30,000+!
Let me put this another way. The average person (with an average hourly wage of $26 per hour currently) would have to work an additional 9+ weeks to recoup what's been wasted by virtue of uniformed financial management. And for the 25% who've been hit hardest by uniformed decision making - that's a minimum of 28 additional weeks worth of work to simply account for those ill-informed decisions making. In the study the researchers found that people were generally honest and upfront about their level of financial understanding but often those who weren't well informed financially weren't inclined to do anything about it. It's a whole lot less work and cheaper to either take the time to inform yourself of financial management and/or hire someone who's informed - than to continue to rack up months worth of additional work to account for ill-informed decision making.