The Negative Impacts of Financial Illiteracy in the United States

The ability to understand and effectively use financial skills among younger American adults appears to have declined over more than a decade.

For instance, on a standard five-question quiz about financial knowledge, adults ages 18–29 averaged 2.5 correct answers in 2009 but only 1.8 in 2021 (Urban & Valdes, 2022).

I believe that one of the reasons for this decreased financial literacy may be related to the absence of cash in our current-day society. Many children no longer see their parents counting out bills or change in stores.

Further, when purchases are made with credit or debit cards, and earnings and bills are handled by parents outside of their children’s awareness, children gain little exposure to how money is accumulated or used.

Without financial literacy, how can we expect young people to thrive without the need for assistance from their families, aid agencies, or the government?

Financial literacy has been shown to be associated with improved financial outcomes (Angrisani et al., 2023). Further, it is well recognized that financial difficulties, some of which can develop because of financial illiteracy, are associated with poorer physical and mental health, particularly depression (Samuel et al., 2025; Tibbetts et al., 2025).

In a 2023 Pew Research Center survey poll, American adults ages 50 and older (63 percent) were more likely than those 18 to 49 (45 percent) to say they were knowledgeable about personal finances.

Distressingly, only half of 18- to 29-year-olds were confident in their ability to create a monthly budget, a plan to pay off debt, or to save money.

Among U.S. adults who were knowledgeable about personal finances in this poll, 49 percent said they learned a great deal or a fair amount about personal finances from family and friends; 33 percent learned from the internet, 27 percent from their college, 24 percent from media including books, and only 19 percent from elementary or secondary schools.

Addressing Financial Illiteracy

I believe that financial illiteracy in the United States would be best addressed in high school (Brown et al., 2014). The families of young adults who are financially illiterate likely also have insufficient knowledge about personal finance (Kristoffersen & Gerrans, 2026).

Further, I believe that people who are financially illiterate are less likely to be able to glean appropriate financial information from the internet or media.

However, the American education system appears to have sidelined teaching personal finances to students for decades. Reasons for this deficit include:

• Schools often focus on teaching standardized testing subject matters that may leave little room for other curricula such as classes about financial literacy (Mulhern et al., 2024; 220 Youth Leadership, 2025).
• In 2009, less than one in five K-12 teachers said they felt very competent to teach personal finance (Way & Holden, 2009).
• Cultural discomfort exists within American society around talking about finances (Empower, 2023). I believe one reason for this discomfort in schools may be related to inequalities in America related to financial literacy and financial means.

What About Our Politicians?

Given our poor track record with financial education, I wondered whether all our elected representatives who make budget decisions for our cities, counties, states, and nation have a good foundation in understanding finances.

I could find no study that assessed the knowledge of elected officials to answer my question.

Given the budgetary difficulties we are experiencing at all levels of government, I propose that our elected representatives be encouraged to:

• Report as part of their campaigns their level of education and experience that is consistent with good financial literacy, including personal finance and public budget competence.
• Assess their financial literacy upon assuming office. If necessary, they can be offered education to improve their financial knowledge base.

The Start of a Solution for Our Society

In the most recent decade, there has been a substantial increase in confidence from teachers in their ability to teach finances, largely thanks to new resources and training programs (Jorgensen, 2025).

To keep that momentum going, American citizens need to continue pressuring policymakers toward positive change. The education system can partner with financial education providers, like Junior Achievement USA and FitMoney, which provide free financial literacy materials (Field, 2020; Jorgensen, 2025).

Specific educational goals for a high-school financial-literacy curriculum could include learning about:

• Budgeting, incorporating discussions about income, expenses, and discretionary spending.
• Banking, interest, inflation, and compound growth.
• Credit cards, credit scores, loans, and the risks of high-interest debt.
• Saving for emergencies and longer-term goals.
• Taxes, insurance, retirement accounts, and employee benefits.
• Recognizing financial scams and evaluating online financial advice.

Students should have opportunities to construct a budget, compare loan offers, calculate the long-term cost of borrowing, and decide how to allocate a hypothetical paycheck, including through use of computer simulations to present real-world scenarios (Intuit Blog team, 2026).

Adults can involve children in age-appropriate discussions of household expenses, savings goals, and purchasing decisions. These conversations can be held without disclosure of private financial information.

Takeaway

Financial literacy cannot eliminate poverty or prevent every financial crisis. However, it can help individuals and our political representatives make informed decisions, recognize financial risks, manage debt, and plan for future expenses.

Also, because financial strain is associated with poorer mental and physical health, improving access to financial education is a worthwhile public health goal.

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