Thomas Brock, CFA, CPA, expert contributor to Annuity.org
  • Written By
    Thomas J. Brock, CFA®, CPA

    Thomas J. Brock, CFA®, CPA

    Expert Contributor

    Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

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  • Edited By
    Savannah Hanson
    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

    Senior Financial Editor

    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Published: July 19, 2022
  • 3 min read time
  • This page features 3 Cited Research Articles
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How to Cite Annuity.org's Article

APA Brock, T. J. (2022, November 21). From the Experts: Is Financial Illiteracy a Growing Problem in the U.S.? Annuity.org. Retrieved December 6, 2022, from https://www.annuity.org/2022/07/19/is-financial-illiteracy-a-growing-problem-in-the-us/

MLA Brock, Thomas J. "From the Experts: Is Financial Illiteracy a Growing Problem in the U.S.?" Annuity.org, 21 Nov 2022, https://www.annuity.org/2022/07/19/is-financial-illiteracy-a-growing-problem-in-the-us/.

Chicago Brock, Thomas J. "From the Experts: Is Financial Illiteracy a Growing Problem in the U.S.?" Annuity.org. Last modified November 21, 2022. https://www.annuity.org/2022/07/19/is-financial-illiteracy-a-growing-problem-in-the-us/.

Financial illiteracy is an increasingly large problem in the United States, a fact especially true for minority groups in lower socioeconomic classes. According to a recent survey conducted by Standard & Poor’s, only 57% of U.S. adults are financially literate. This was measured by those exhibiting knowledge across the following four basic financial concepts: risk diversification, numeracy, inflation, and compound interest.

A lack of financial literacy can greatly inhibit the average American’s ability to reach their financial goals. Let’s look at two of the major issues impacting Americans’ financial wellness and some solutions to these problems.

Many Americans Don’t Have an Emergency Fund

A key principle of financial wellness is building and maintaining an emergency fund. An emergency fund is an amount of money you set aside for emergencies. Having an emergency fund can safeguard your financial health by keeping you out of debt in the event of unexpected expenses.

An emergency fund is foundational to any sound financial plan. It provides the buffer that allows you to endure the inevitable and unexpected financial difficulties of life. The size of your emergency fund largely depends on your tolerance for risk and ability to save. That said, most financial professionals advise establishing a minimum reserve of three to six months of monthly expenditures.

Saving that much money can seem daunting for households who are living from paycheck to paycheck. But it’s important to start somewhere, even if you only can only save a few dollars at a time. According to a report by the Financial Industry Regulatory Authority, low-income households with just $100-$250 in savings were more likely to be financially stable and to feel financially satisfied.

When starting an emergency fund, first create a personal budget. This foundational step is important to help you understand the relationship between how much money you earn and spend each month. Once you’ve done that, you can set a realistic goal for your emergency fund and figure out how much you need to save each month to reach that goal.

Many Americans Are Drowning in Credit Card Debt

Credit card debt is a growing problem in our country, with a recent report finding that roughly 14 million Americans have over $10,000 in credit card debt. A 2021 survey of credit card users reported that 15% of respondents have been carrying a monthly credit card balance since before 2006.

Many people accumulate excessive credit card debt because they do not maintain a household budget. As a result, they do not understand their finances, and they lack a mechanism to encourage discipline. This can lead to a carefree attitude toward spending and the liberal use of credit to make ill-advised purchases. Unfortunately, it doesn’t take long for high-interest debt to cripple you financially.

Consumers looking to pay off credit card debt quickly have a few options. If your credit card charges high interest rates, you might be able to transfer your balance to a card with an interest rate that’s lower than you’re paying now or even 0% for the introductory period. Personal loans are another useful strategy, as they also tend to offer much lower interest rates than credit cards. No matter which route you choose, curbing overspending is paramount.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: November 21, 2022

3 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Consumer Financial Protection Bureau. (2022). An essential guide to building an emergency fund. Retrieved from https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/
  2. FINRA.org. (2020, December 10). Finra.org. Maintaining Over $100 in Savings Linked to Increased Likelihood of Financial Stability in Lower Income Households. Retrieved from https://www.finra.org/media-center/newsreleases/2020/maintaining-over-100-savings-linked-increased-likelihood-financial
  3. Ramirez, K. (2022, February 17). 14 million Americans have over $10K in credit card debt, survey says: 3 ways to pay it down quickly. Retrieved from https://www.foxbusiness.com/personal-finance/credit-card-debt-in-america