Mon­ey is a fact of our every­day lives and in order to live hap­py, pros­per­ous lives we must be finan­cial­ly lit­er­ate.  Sad­ly, the data tells us that as a soci­ety we are not prop­er­ly prepar­ing our­selves or our chil­dren.  This means every day mon­ey cre­ates unnec­es­sary stress in our lives and our rela­tion­ships.

Here are some of the dis­turb­ing stats, and how we may be able to change them.

Overall Financial Literacy Stats

From 2012 NFCC Con­sumer Finan­cial Lit­er­a­cy Sur­vey:

  • 56% of Amer­i­can adults do not have a bud­get, includ­ing 22% who say they don’t have a good idea of how much they spend on hous­ing, food and enter­tain­ment.

  • Two in five adults say they are now sav­ing less than last year

  • 39% do not have any non-retire­ment sav­ings

  • 42% of sur­vey par­tic­i­pants give them­selves a grade of C, D or F on their knowl­edge of per­son­al finance.

From Pew Research Cen­ter 2011:

  • 74% of Amer­i­can work­ers have dif­fi­cul­ty afford­ing gaso­line

  • 65% are expe­ri­enc­ing prob­lems afford­ing heat and elec­tric­i­ty

  • 50% are unsuc­cess­ful­ly grap­pling with increased gro­cery bills

  • 32% have no retire­ment plan oth­er than Social Secu­ri­ty

  • 62% of the self-described “work­ing class” por­tray their incomes as falling behind the cost of liv­ing.

What you can do:

  • Use free online tools like Mint.com to ana­lyze your spend­ing, and cre­ate a buget that works.

  • Set Up a direct deposit to your sav­ings account for every pay­check. It makes sav­ing fast and easy, but remem­ber to only put aside as much as you can afford. If you try to save too much you can make a habit of drain­ing your sav­ings.

  • DivaC­FO has free print­able tools for every­thing from estate plan­ning check­lists to a gar­den bud­get plan­ner.

  • It takes 21 days to cre­ate a habit or break one. Do some research and find ways to keep your­self account­able to your bud­get.

  • Take pub­lic tran­sit, ride a bike, walk or car­pool to cut down on ris­ing gas prices.

  • Buy whole foods instead of pre-made items at the gro­cery to cut down on gro­cery bills, and have cook­ing din­ner par­ties with fam­i­ly or friends to elim­i­nate some enter­tain­ment costs.

For couples

From the AICPA Har­ris Inter­ac­tive sur­vey, April 2012

  • Finan­cial mat­ters are the most com­mon source of mar­i­tal dis­cord; Cou­ples aver­age 3 argu­ments per month about finan­cial mat­ters- more than they argue about kids, chores, work or friends

  • 55% do not set aside time on a reg­u­lar basis to dis­cuss finan­cial issues

  • 30% of adults who are mar­ried or liv­ing with a part­ner have engaged in at least one poten­tial­ly deceit­ful behav­ior relat­ed to their finances.  Men and woman are equal­ly like­ly to have engaged in poten­tial­ly deceit­ful behav­ior

Financial Literacy for CouplesWhat you can do:

  • Use the My Mon­ey Check­list to devel­op a reg­u­lar com­mu­ni­ca­tion rhythm and good mon­ey habits

  • Devel­op a month­ly and annu­al bud­get with your part­ner or spouse.  When you bud­get, you essen­tial­ly agree in advance on your spend­ing, replac­ing argu­ments with nego­ti­a­tion

  • Devel­op per­son­al goals and set up a sav­ings plan for each major goal

  • Hire a finan­cial advi­sor to guide you through a com­pre­hen­sive finan­cial plan.  You could save your rela­tion­ship and you’ll reduce unnec­es­sary con­flict

For Young Professionals

From the PNC finan­cial inde­pen­dence sur­vey March 2012

  • Today’s twen­tysome­things hold an aver­age debt of about $45,000, which includes every­thing from cars to cred­it cards to stu­dent loans to mort­gages

  • Unem­ploy­ment for those 18–29 is 12.4%, well above the nation­al rate of 8.2%

  • Young peo­ple face an increas­ing­ly com­plex glob­al econ­o­my that is cred­it dri­ven and puts more respon­si­bil­i­ty on indi­vid­u­als to plan for and man­age their retire­ment accounts

What you can do:Gen Y in the Workplace

  • Cal­cu­late ROI for col­lege before choos­ing a degree pro­gram.  Col­lege is an invest­ment and like any invest­ment, mak­ing it wise­ly takes time and research

  • As a par­ent, get into the habit of reg­u­lar­ly sav­ing for col­lege.  Whether you can save all your chil­dren need or not, some if bet­ter than all

  • As a stu­dent, start your own sav­ings plan for col­lege as soon as you can work.  Con­sid­er work­ing part-time or sum­mers while in  school to pay some of your expens­es

  • Get cre­ative on ways to reduce col­lege costs such as tak­ing advance place­ment class­es in high school, attend­ing com­mu­ni­ty col­lege and liv­ing at home

  • Seek out class­es at your local school, library or not for prof­it on mon­ey basics  

  • Find a men­tor, some­one you admire who man­ages their mon­ey well and ask them for their guid­ance

  • Make sav­ings a habit.  Start with your first pay­check.  Sign up for a 401(k) as soon as you are eli­gi­ble.  Open an after tax account and save for vaca­tions, emer­gen­cies and the unex­pect­ed that always hap­pens!

For Children

From Har­ris Interactive’s July 2012 Sur­vey for AICPABasic Financial Education for kids

  • Par­ents are more like­ly to have talked with their chil­dren about the impor­tance of good man­ners, 95%, the ben­e­fit of good eat­ing habits, 87%, the impor­tance of get­ting good grades, 87%, the dan­gers of drugs and alco­hol, 84%, and the risks of smok­ing, 82%, than about the val­ue of mon­ey and man­ag­ing it wise­ly, 81%.

  • Chil­dren, on aver­age, are 10 years old when mom or dad – most often mom – has the first finan­cial con­ver­sa­tion with them about mon­ey, accord­ing to the sur­vey.

What you can do:

While all of these num­bers and sta­tis­tics may shock or even scare you they do not mean we are doomed. Mon­ey has always been a taboo sub­ject, but for us to live in a finan­cial­ly lit­er­ate soci­ety we need to start hav­ing these uncom­fort­able con­ver­sa­tions. If we all do just a lit­tle bit to edu­cate our­selves, our fam­i­ly, and our com­mu­ni­ty about mon­ey we can make a huge dif­fer­ence!  

 Relat­ed Arti­cles:

How to Teach Your Kids about Mon­ey at any age

5 Rea­sons Not to Co-sign a Per­son­al Loan

7 Tips for Cre­at­ing Pros­per­i­ty