10 Scary Financial Literacy Statistics (2021)

Whether it's whispers between friends or anecdotes shared on social media, there's plenty of stories pointing to the fact that Americans sometimes really struggle with their finances. But is there any concrete data? Unfortunately, there is. And unlike Halloween, these scary financial literacy statistics that haunt us year round.

Scary Financial Literacy Statistics for Kids & Teens

Have you ever wondered when kids start to learn about money? The easy answer is right away. Kids are learning about money all the time. In fact, according to some researchers, money habits actually start to develop by the age of 7. That’s why it’s so important to pay attention to these financial literacy statistics for kids and teens. 

Here are five financial literacy statistics that caught our attention:

1 in 5 teens lacks a basic foundation to build on for financial literacy.

According to a 2015 PISA Study, 22% of teens lack a foundation in basic financial skills. That means that they felt they did not have the background to do basic things like build a budget for beginners. So how do we go about making sure all teens have this foundation? 

Too often, people look at financial literacy as a concept that needs to be taught in a standalone class. While we absolutely love the idea of every child and teen having access to a class like this, we know it’s not reality. But what is reality is that many financial literacy concepts can be interwoven into existing classes and coursework. Perhaps an English class allows students to interview other people about different money concepts or a math class encourages students to calculate the true cost of a credit card purchase by teaching percentages. 

Teens spent an average of $2,150 in 2020.

In 2020, teens reported spending an average of $2,150. This average annual spending is actually a low point over the last twenty years.

It isn’t our place to tell teens how and when to spend. Instead, we want kids of all ages to have an understanding of saving, spending, and sharing. Plus, all of our curriculum starts with conversations about values. No two people spend the same way because no two people have the same money values. But by understanding what is important to them, kids and teens can save and spend more thoughtfully. 

74% of teens don’t feel confident about their financial education.

A Greenlight study in 2021 found that nearly 3 out of 4 teens find their financial literacy to be lacking. 

Ask any teacher and they will tell you how often teens are underestimated. The reality is that teens are capable of far more than we give them credit for, and they’re incredibly self aware. Perhaps that’s why this Greenlight study was so painful to read.

As teachers and parents, we can all think of a time when we explained something well (or so we thought!), only to discover it was quickly forgotten. That’s why we need to reevaluate how we share financial literacy with young people. Incorporating authentic activities, like our financial passport project, gives kids and teens a chance to make meaningful connections to concepts, such as budgeting and entrepreneurship.  

46% of teens don’t know what a 401(k) is.

That same Greenlight study also found that about half of teenagers don’t know what a 401(k). 

We know what you’re thinking: there are plenty of adults who aren’t totally clear on a 401(k) either. That may be true, but it’s still vital that young people have opportunities to learn about saving for retirement. Thanks to compound interest, getting a head start on putting money away into a 401(k) or other retirement account might mean the difference of hundreds of thousands of dollars. No, seriously. That’s why compounding is one of our favorite lessons to teach kids! 

32% of teens can’t identify the difference between a credit card and a debit card. 

Later, the 2021 Greenlight study also showed there is major card confusion for some teens. More than 1 in 4 teens couldn’t distinguish between a credit card and a debit card. Why is this so scary? 

Imagine not realizing that a debit card immediately deducts money from your account. Picture what happens if you swipe a credit card, not considering the interest that accrues if you don’t pay your bill on time. Credit cards and debit cards look nearly identical, but they work in profoundly different ways. That’s why it’s important to have conversations about both types of plastic with kids. 

Scary Financial Literacy Statistics for Americans

When it comes to financial literacy statistics for Americans, there are some truly spooky numbers. 

Here are five financial literacy statistics that jumped out at us:

1 in 3 Americans delayed a major decision due to finances.

A 2018 study shows that over one third of Americans have postponed a major life decision due to money. The scariest part of this study? It’s actually an improvement! In 2015, more than half of Americans reported delaying a decision. 

Money is important, but we don’t want it to drive our lives. In fact, financial independence is all about using money as a tool to engineer the life you want. That’s why it’s so critical to start taking steps to improve your financial situation today. Not sure where to start? We built a free, self-paced course called FI101 to help with exactly that. 

Americans pay an average of $577 in late fees, overdrafts, and fraud-related charges.

According to CNBC, Americans are letting a lot of money slip through their fingers. Late fees and overdraft charges combined with costs that come with fraud total up to an average of nearly $600. What could an extra $600 do for you each year? Learning how to get ahead of your debt can have a huge financial ripple effect. Our free resources and community support from our Facebook groups can help you get started today. 

21% of Americans have no emergency savings.

A Bankrate survey found that as of 2020, 21% of American households have no money set aside for emergencies. This can spell financial disaster. But building an emergency fund is no easy task. Many people feel pulled in so many directions. Do you pay down debt first? Do you start saving right away? And what about investing? 

We know it’s nice to have a financial roadmap, so we created resources to help you strategize and share them for free in our FI101 course. 

4 out 5 parents wish they learned more about money as a kid.

When parents were surveyed, the vast majority was really clear about one thing: they wish they knew more about finances when they were younger. Of course, we all know the cliche about hindsight being 20/20. Rather than spend time fretting over what you wish you learned sooner, commit to learning even more about money now...and take your kids along for the ride. 

Maybe you’re reading books together and discussing ways that money, work, wants, needs, sharing, and giving influence the characters. This works for TV shows and movies, too. Or perhaps you have your kids grocery shop and meal prep with you. Money influences nearly every aspect of our lives, so taking the time to talk about it can make for a great teachable moment. 

59% of parents are uncomfortable talking to kids about money.

In that same One Poll survey for Chase, parents admitted that they don’t always feel confident having money conversations with kids. Pushing for a financial literacy curriculum and conversations in schools can help. 

But we also know that nothing replaces learning about money at home. That’s why we put together a financial literacy course for families to do together. You don’t have to be an expert. In fact, sometimes the most powerful lessons we can share with kids are mistakes we made and how we are recovering from them. 

Closing Thoughts on Scary Financial Literacy Statistics

Money can be difficult. There’s the math and there’s also the emotions and the psychology of it. That’s why the ChooseFI International Foundation is on a mission to promote financial literacy and financial independence to schools, families, and adults. 

Our free PreK-12 curriculum provides a comprehensive foundation for financial literacy as well as an introduction to financial independence. These scary money statistics show that it’s never too soon to learn about retirement and future savings goals. 

Additionally, the Foundation offers a free FI101 course to help adults work through all the things we wish you would have learned in school! If you’re ready to kick start your financial independence journey and make sure you’re not a scary financial literacy statistic, check out FI101.