Americans Are Learning About Money Everywhere — So Why Are Knowledge Gaps Growing?
From personal finance podcasts to influencers and financial apps, Americans have more ways than ever to learn about money. Yet, research suggests financial literacy is moving in the opposite direction.
If information is more accessible than ever, why are so many people still struggling to make sound financial decisions? We asked the experts for their insights into this disconnect.
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Information Overload
The presence of so much financial advice online is part of the problem, according to Curt Scott, certified financial planner (CFP) and president of Scott Financial Group.
"I believe it's a case of too much information and conflicting advice," he said. "Everyone on apps, podcasts and social media has an opinion and positions themselves as an expert."
This can lead to confusion and difficulty when trying to decide which financial actions are right.
Robert R. Johnson, professor of finance at Creighton University, also feels that social media pressure “to stand out and remain relevant” pushes content creators to make “outlandish statements" about money that aren’t always accurate or ideal.
Knowing What To Do and Actually Doing It Are Two Different Things
Financial literacy conversations can also focus too heavily on knowledge and not enough on behavior, according to Nick Avila, founder of United Debt Relief.
"Knowing the right move and being able to make it under pressure are two different skills, and we only teach the first one,” he said.
While it’s important for people to educate themselves, Marilyn Suey, a CFP and founder of The Diamond Group Wealth Advisors, suggested that it is the responsibility of financial advisors “to educate, empower and inspire [their] clients to take action for themselves."
Overconfidence Is Making the Problem Worse
Avila cited the latest findings from the TIAA Institute-GFLEC Personal Finance Index, which found that U.S. adults answered only 47% of basic personal finance questions correctly. In addition to this, many rated their money knowledge far higher than they scored.
“That confidence keeps them from asking for help until they're already in a hole,” he said.
Johnson agreed that overconfidence is a problem. He often sees people who “think they are so savvy for buying a stock … when the market goes up, [but] they don't understand the fundamentals of the market or of a particular stock.”
Other Causes of Financial Literacy Gaps
Not everyone has the same ability to absorb or act on financial information.
"Many of our clients lead very busy lives with working, while taking care of family and possibly parents," Suey said.
Scott added that “income stress” can cause some gaps. As he explained, “It seems that people are having a more difficult time finding the extra funds to make long-term financial planning decisions."
What Would Actually Improve Financial Literacy?
The experts agreed that rather than flooding people with more content, early education is key.
Johnson said that “teaching financial literacy in college is simply too late." Instead, he advocated for teaching financial literacy in middle and high schools to better prepare kids for the real world.
Filtering the Noise
Financial knowledge gaps aren't growing because Americans lack access to information. If anything, they may have too much of it. The challenge now is helping people filter noise, build good habits and turn knowledge into action when it matters most.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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