The New Financial Divide Isn’t Income — It’s What People Know About Money
Financial success may seem as simple as earning more money and building more wealth. But in an era when financial advice is available everywhere, how people put that knowledge to use is a greater determining factor.
New research from the 2026 TIAA Institute-GFLEC Personal Finance Index shows persistent financial literacy gaps across the U.S. and raises an important question: Is financial knowledge becoming a new economic advantage?
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Here’s what the experts said.
Financial Knowledge Matters More
Financial information has never been more accessible, yet many people still struggle with everyday money decisions. Julian B. Morris, a certified financial planner (CFP) and owner of Concierge Wealth Management, suggested that the sheer abundance of information has changed the financial landscape.
“The challenge today isn’t a lack of information, it’s information overload. People spend so much time consuming financial content that they never get around to implementing good habits.”
Adam Olson, a CFP at Mutual of Omaha, agreed that having knowledge doesn’t necessarily empower people to use it.
“If anything, the new challenge we’re seeing today is figuring out what information is helpful and then putting it into practice.”
How Financial Literacy Helps Build Wealth
While income certainly creates opportunities, both experts said financial literacy influences how effectively people use the money they have.
Specifically, Morris said that financial literacy “helps people avoid costly mistakes and make better decisions around saving, borrowing, investing and taxes.”
Olson added that financial literacy “influences someone’s confidence” when it comes to making informed decisions about your money.
“When you understand where your money is going and have a clear idea of what you're trying to achieve, it's much easier to make the most of what you have, regardless of your income level."
The Habits That Separate Financially Successful People
When it comes to financial success, habits matter more than income alone.
“Financially knowledgeable individuals tend to think long term,” Morris explained. They understand compounding, debt, risk and taxes. They also tend to be “less reactive when markets or the economy become uncertain.”
Financially knowledgeable individuals “tend to keep a close eye on their finances,” Olsen said. “They know the health of their accounts on a consistent basis.”
In fact, Morris said that he’s seen many moderate-income households “outperform” higher earners and build “substantial wealth” because they consistently save and invest.
“Income creates opportunity," he continued. "Habits determine outcome.”
The Money Misconceptions That Keep People Stuck
Financial literacy gaps often show up in small daily decisions long before they become major financial problems. Morris explained that these can include carrying high-interest credit card debt, saving too little, taking too much investment risk or keeping too much cash out of fear.
Another misconception is that small purchases don’t do much harm. However, Olsen warned, “It’s a snowball effect of just one — just one more takeout meal, just one more add-on subscription or just one more night out.”
Closing the Gap Between Knowing and Doing
The experts agreed that improving financial literacy often starts with strengthening fundamentals.
“Most people don’t need a more complicated financial plan. They need a system that helps them consistently make good decisions,” Morris said.
Olson recommended practical approaches such as expense journals, budgeting check-ins, “admin nights” with friends and working with a trusted financial advisor when appropriate.
If there is a new financial divide emerging, it’s not defined by income alone. But it’s never too late to gain financial literacy.
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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