Financial illiteracy can be incredibly costly, both in the short term and over a lifetime. According to the Financial Educator’s Council’s 2024 Report, responders indicated financial illiteracy cost them on $1,506 in 2023. As I have worked with people I’ve seen how a lack of basic financial knowledge leads individuals to make poor financial decisions that can spiral into debt, lower credit scores, and missed opportunities for wealth building. Without an understanding of how to budget effectively, people often overspend, live paycheck to paycheck, and fail to save for emergencies. This lack of preparedness can result in high-interest credit card debt or costly payday loans, which can be difficult to escape once they’re incurred. The compounding effect of high-interest rates means that what might start as a small loan can balloon into a substantial financial burden, leaving people trapped in a cycle of debt.
In the long term, financial illiteracy can severely impact one’s ability to build wealth and secure a stable financial future. Many people lack the knowledge to invest wisely, resulting in missed opportunities for wealth accumulation through compound interest, retirement accounts, and diversified investments. Additionally, those who do not understand the importance of credit may face higher interest rates on loans or even be denied financing altogether. This can affect major life decisions, such as buying a home, starting a business, or funding education. Over time, the cost of financial illiteracy can compound, leading to a lower quality of life, increased stress, and limited financial security in retirement. This is why I built an education program and coach individuals to understand finances and make better financial decisions. No matter what path you take, any money you invest in your financial education will help reduce the chance of you being one of the people in the survey above.
