Ignorance may be bliss, about personal financeit can also end cost you a lot.
look: 4 Reasons You Should Cancel Amazon Prime
read: 3 ways smart people save money when filing taxes
seek: How the 2023 recession will be different from 2008, and how to prepare differently
In fact, a new study from the National Financial Educators Council (NFEC) finds that in 2022, lack of financial literacy and ignorance of how to manage personal finances will cost a lot. They said he cost $500 or more, and a whopping 23% said he cost $10,000 or more. In 2021 he is up significantly from 10.7%.
As a result, the estimated average amount Americans will lose to financial literacy in 2022 is $1,819, the highest since the first annual survey was conducted six years ago. The figure correlates with record inflation and other economic challenges, NFEC notes.
“Somewhere you have to learn about money. For many people, they learn from their mistakes. financial literacy not only provides people with the tools they need to meet their basic financial needs, but it also encourages savings and investment, ultimately enabling them to reach financial freedom.”
According to the Consumer Financial Protection Bureau (CFPB), the median debit card overdraft fee is $34.
Most debit card overdraft fees occur on transactions of $24 or less, with American consumers spending $17 billion annually on overdraft and insufficient funds fees, according to the study, which cites CFPB data. .
Not paying attention to credit card interest charges is another common mistake. According to Creditcards.com, the average credit card interest rate for the week of January 18 was a record 20.16%.
Other common mistakes include spending on unnecessary luxuries, buying an expensive new car, identity theft, fraud, and giving in to fraud.
Madison Sharick, CFA, CFP and Madi Manages Money writers say that while these are ‘explicit costs’, there are other sets of costs that are not generally considered, and they are more expensive items. pointed out that
“For example, if you withdraw cash early from your retirement account, you could end up with thousands of dollars in penalties. Or if you keep all your money in cash instead of investing it, over time It will lead to erosion of inflation,” she said.
What can Americans do to lower costs in 2023?
“What percentage of our everyday lives need to understand geometry? But we all need to understand how to budget, invest in retirement, and use credit responsibly.” Yes,” said Todd Stearn, founder and CEO of The Money Manual. “The United States can be a very difficult place to live comfortably, at least if you have never been taught the basics of personal finance. To do.
For example, Stern recommended learning how compound interest can “literally save your life in retirement.” Plus, learning how to build your credit score can help you qualify for the best interest rates on your mortgage or car loan, and learning about inflation can help you better manage your savings.
“You don’t have to be perfect. Being financially literate is the first step to greater peace of mind,” he added.
Other experts also stressed the importance of better understanding the costs of higher education.
COO of Gift of College, Route 529: A Parent’s Guide to Saving for College and Career Training for the 529 Plan.
“Families need to realize that borrowing too much money to attend an affordable dream school can be a financial nightmare,” Roberts said.
In addition to student loan debt being unmanageably high and likely to cause severe stress for years to come, Roberts said, it also added that borrowers’ retirement savings, mortgage eligibility, or He added that it could interfere with his ability to save for his own children’s education when starting a family.
Please answer the questionnaire: Are you in favor of further easing inflation in 2023?
more: Shop these 7 Costco items now to save money throughout 2023
This sentiment is echoed by multiple experts, including Summer CEO Will Sealy. Sealy says the best advice for student loan borrowers is to start your homework early and rely on trusted sources like Federal Student Aid.
“When in doubt, ask your Human Resources or Benefits team for help. Employers may offer student loan assistance as a free employee benefit, along with other financial literacy tools. Student Loan Contribution Program are becoming more and more popular and can have a significant impact on your financial situation.
Learn more about GOBankingRates
This article originally appeared on GOBankingRates.com: Financial literacy (or lack thereof) could make more than $10,000 annual wallet difference in 2023