Study finds most Americans want to improve their financial literacy

As the nation celebrates Financial Literacy Month, it is encouraging to learn that more than three-quarters of Americans wish they had more financial literacy pertaining to core financial topics like saving, investing, retirement, and budgeting. This is according to the latest BMO Real Financial Progress Index.

Additionally, Americans between the ages of 18 to 44 reported having the highest desire for more knowledge about financial topics. Younger millennials ages 25 to 34 reported having the highest desire (90%), followed by Gen Z ages 18 to 24 (89%), and finally, older millennials and younger Gen X, ages 35 to 44 (86%).

The Index also discovered that 53% of Americans reported having no conversations about budgeting, financial planning or similar topics while they were growing up. However, the study may indicate a dramatic shift in a positive direction, with 66% of younger Americans ages 18 to 24 reporting that their family supported financial literacy, compared to only 43% of Americans ages 45 to 54.

What’s fueling these changes?

The overwhelming desire to improve financial literacy comes at a time when more than two-thirds (69%) of Americans reported having made budget adjustments in order to address recession concerns. In fact, Hispanic Americans said that concerns about a potential recession impacted financial goals more than any other group at 77%, compared to 66% of White Americans.

Within the last few months, two-thirds (68%) of Americans said that concerns about inflation have decreased, a significant decline from 76% in 2022. While Consumer Price Index (CPI) inflation has fallen sharply from four-decade highs of 9.1% last summer, it was 6% as of February and is still squeezing family budgets, according to BMO Economics.

Helping to improve financial literacy

To help raise the level of financial literacy, BMO says that it has a financial literacy e-book in collaboration with United Way. The book was launched in December 2022.  This digital repository helps consumers make real financial progress through expert financial advice on budgeting, debt and credit management, digital banking, homeownership and more, BMO said.

While financial confidence among Americans today remains below levels measured a year ago (72% very or somewhat confident, compared to 75% in the first quarter of 2022), 44% of Americans said they are making real financial progress, and more than 8 in 10 (81%) reported actively taking steps to improve their financial situation.

Advisors helping clients move forward

And as Americans take steps to improve their financial situation, many are being helped by their agents and financial advisors. One such agent is Kathleen Owings, principal and financial advisor at Westbilt Financial Group.

Owings thinks that understanding their personal expenses is too often overlooked by clients, and they have an estimate or they just guess how much money they spend each month.

As a result, Owings has many of her clients go through a detailed exercise during which they input their monthly expenses into a spreadsheet so that they can see all that they spend each month and can have a solid understanding of their income need.

“This is so important for our conversation when it comes to various planning areas, such as retirement income needs, life insurance and disability income,” Owings said.

Another advisor who works hard to help his clients enhance their level of financial literacy is MDRT member Aamir Chalisa, general manager at Futurity First Insurance Group.

Offering financial planning tools

Chalisa said that his firm has various financial planning tools that it uses to do complete financial planning at basic and advanced levels so that everyone gets an opportunity to see what the products they bought are doing and whether their plan still works for them.

“Then we do annual reviews with all of our clients and educate them on what’s new, and review if things have changed in their lives,” Chalisa said.

For financial literacy, his firm offers seminars to existing and new clients on an ongoing basis throughout the year to educate them on the importance of financial planning.

The firm also hosts these seminars for young adults, newly married, and new-to-the work-force employees who need help with savings, insurance, and investments as they embark on their life journey. In addition, he said, “we create and provide materials on financial literacy, as well as ads and postings on LinkedIn, Facebook and other social-media outlets.”

In addition, Chalisa’s firm is educating teens about how to save money and how to be responsible as they cross over into adult life.

Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress.

The Index aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many: money. The research was conducted by Ipsos in the United States from January 16 to February 12, 2023. A sample of 2,500 adults ages 18+ in the U.S. was collected.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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