Here’s how much people are saying about the cost of not having financial literacy in 2022

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When it comes to money, what you don’t know can hurt you.

A report from the National Council of Financial Educators showed that 38% of individuals in a recent survey said their lack of financial literacy cost them at least $500 in 2022, including 15% who said it set them back $10,000 or more. That’s up from about 11% in 2021.

The majority of respondents (68%) said that poor financial education costs them between zero and $499.

The average cost was $1,819, according to the survey conducted Oct. 23 to Dec. 5 among nearly 3,000 adults across the country. That number in 2022 is about $500 higher than the average of $1,389 in 2021.

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“A lot of people come out [school] Certified Financial Planner Dennis Poljak, a partner with Poljak Group Wealth Management at Steward Partners in Shreveport, Louisiana, said:

“They just ended up … learning from their mistakes,” said Bulgak.

Adults in the United States have large gaps in their financial knowledge

Studies show that financial literacy—which generally means understanding financial topics ranging from income and budgeting to saving and investing, as well as how interest rates work and why credit scores matter—is lacking among many adults in the United States.

For example, adults answered correctly, on average, 50% of 28 basic questions about money in 2022 TIAA Institute-GFLEC Personal Finance IndexThe sixth annual measure of financial literacy. Even worse, the percentage of respondents (23%) who could not correctly answer more than seven is higher than in any other year in the survey.

The problem, experts say, is that a lack of knowledge can affect everything from how much you save — whether for emergencies or for the long term (for example, the retirement) – to the amount of debt you take on and under what conditions.

Financial knowledge is a ‘key tool in the toolkit’

Financial literacy advocates say that teaching should begin before teens reach high school graduation. As of last year, 24 states require personal finance courses by grade 12, according to the nonprofit Council on Economic Education.

“There is good data that shows that people make better decisions when they are financially knowledgeable,” said Nan Morrison, CEE President and CEO.

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For example, Morrison said, you’ll likely have a better credit score and be less likely to lose money Defaulting on a loan If you have some personal financial know-how. A 2015 study from the Financial Industry Regulatory Authority’s Investor Education Foundation points this out: After three years of implementing personal finance education in Georgia, Texas, and Idaho, all three states saw sharp declines in delinquency rates and higher credit scores.

Additionally, in 2021, individuals with above-average scores on a seven-question financial literacy test were more likely to make ends meet, according to FINRA’s latest financial ability study. Specifically, they spent less than their income (53% vs. 35%) and had three months’ worth of emergency funds at higher levels (65% vs. 42%).

They were also more likely to be accounted for retirement savings Need (52% vs. 29%) and open a retirement account (70% vs. 43%), according to the study.

“For me, the bottom line is that in order to live the life you want to live, you have to understand how to manage money,” Morrison said. “It’s not the only important thing, but it’s a key tool in the toolkit.”

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