How Does Financial Literacy Affect Quality of Life?

How Does Financial Literacy Affect Quality of Life

Last week we discussed ways to attain comfortable financial security. Of course this doesn’t just happen on its own. Rather, it’s the result of careful evaluation of financial goals, needs, and objectives, and then laying out a blueprint to achieve those milestones.

Once you have a plan in place, it’s a matter of staying on top of your finances. With steadfast diligence and assistance from a qualified financial professional, timely checkups on your portfolio and readjustments – if needed – will help keep your financial roadmap on course. In due time, this commitment pays off. It leads to financial independence, peace of mind, and clarity in the ways you deal with your money.

Ultimately, all of this begins with financial literacy. As the old saying goes, “Knowledge is power,” and having strong financial awareness puts you in the driver’s seat for sound decision-making. Unfortunately, this isn’t the case for many American households.

The State of Financial Literacy Today

To be clear, “financial literacy” refers to having basic awareness of financial matters. As Jim Chilton, Safe Money Approved Advisor and Founder/CEO of The Society for Financial Awareness, writes in the San Diego Union-Tribute:

“Do you remember when we were kids and we played musical chairs? Though a simple game for children, most Americans play it with their money 24/7 their entire lives… Without proper financial literacy, we position ourselves to sink lower and lower in our financial situations and open ourselves up to more and more bankruptcies, divorces, broken homes, depression, suicides, nervous breakdowns, and total despair (Source: Financial literacy vital for all Americans, Jim Chilton,, April 28, 2016).”

In short, financial illiteracy leads to diminished quality of life and reduced desirable life outcomes. Numerous study data shows financial literacy is at a notable low in the United States:

• In December 2014, The American College of Financial Services conducted a Retirement Income Literacy Survey in which it asked people financial questions about retirement – just 20% of those surveyed attained a passing score
• In the first-ever S&P Global FinLit Survey (reported in November 2015) – a survey assessing adults’ financial literacy worldwide – only 57% of American adults passed

• In an international study of student financial literacy in 18 countries, the United States ranked at best eighth and at worst 12th in financial literacy

These are just a few notable findings, given the current financial landscape in the United States:
• There’s $1.3 trillion in student loan debt held by 43 million borrowers – many of whom are parents helping students with education financing

• Total credit card debt is $917 billion – many Americans individually are just $500 away from reaching unsustainable debt levels

• According to study data from, 36% of surveyed adults don’t have a penny saved for retirement – and 25% of people aged 50-64 have yet to start saving

While these are just a few findings, the message is clear. Financial illiteracy is a trend with implications for all Americans – retirees, workers close to retiring, and their families.

What’s the Solution?

The key is to get away from what Chilton calls the “spend first, then figure it out” mentality.

As he writes: “Financial literacy is a big deal. It is incumbent upon all of us to be in the know, become students of our financial bounty and learn to manage our cash rather than having it manage us. The quiet you have, in your pausing to reflect, is the music stopping. It’s time to take a seat, identify exactly where you’re at, and begin the journey of taking self-control of your money and financial situation.”

The first step begins with individual action. Take the time to learn about money issues so you’re empowered for financial security now and in the future. Of course this isn’t a journey you must take alone. If you're ready for personal help or you have questions, can help you.

Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

Author: Super User

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