Financial literacy entails having a solid understanding of money management so you can make good decisions when creating a budget, saving and investing money, managing debt and paying taxes.
The consequences of not being financially literate can be costly. In fact, Americans estimated they lost an average of $1,819 in 2022 due to lack of knowledge about personal finances, according to a study by the National Financial Educators Council.
In addition to understanding money management concepts, it’s important to have the skills needed to handle budgeting, managing bills, investing money and saving for retirement and other financial goals.
Here we’ll go over ways lack of financial literacy could be costing you money, as well as ways you can save more money by becoming more knowledgeable about personal finances.
How financial illiteracy can hurt consumers
Lack of knowledge when it comes to your bank accounts could mean you’re being charged fees that are avoidable, and you could also be losing out on opportunities to earn higher annual percentage yields (APYs).
Similarly, not paying attention to your credit card use or misunderstanding your credit card’s terms could cause you to wind up in debt that includes a hefty amount of interest. Whether it’s lack of knowledge about banking, credit cards or ways you might become a victim of financial fraud, financial illiteracy could leave you with unnecessary fees, a low credit score and difficulty borrowing money.
Avoiding the costs of financial illiteracy
Here we’ll look at various ways a lack of personal finance knowledge could be costing you thousands each year, along with ways you could avoid unnecessary fees and put more money back in your bank account.
Bank fees
While bank fees are often easy to avoid, they’re commonly overlooked and can add up quickly. For instance, more than a quarter of Americans with a checking account are paying monthly fees, according to a recent Bankrate survey, which also found…
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