More than half of Americans (52 percent) gave themselves an A or B grade on their saving and investing knowledge, while giving the average American a failing grade of D, according to a new survey.
The survey, by Genworth Financial, found that 97 percent of the survey respondents agreed on the importance of financial literacy, but 88 percent felt they did not have enough. In addition, 58 percent of the survey respondents blamed the lack of financial education as a top reason why pre-retirees don’t have enough money saved for retirement.
Genworth’s continuing series of Psychology of Financial Planning consumer research aims to gain further insight into the psyche of Americans and what prompts or restricts them from planning for their financial futures. Genworth’s latest study focused on Americans’ financial literacy.
“Despite having more financial education resources available than ever before in the form of books, TV shows, websites, blogs, etc. we don't take advantage of them and, if we do, we don't apply what we learn,” said Dr. Barbara Nusbaum, a New York-based psychologist and money coach. “Why? Financial decisions, behaviors, and actions are highly motivated by emotional and psychological factors. If we can better understand our personal feelings about money, we will be more able to educate ourselves and, most important, better apply this knowledge to secure our own and our families’ futures.”
Psychological feelings about one’s finances and the motivation to become financially educated varied by individual, with particularly significant differences between genders. The data revealed that only 40 percent of women would give themselves a grade of A or B on their knowledge of saving, preparing for the future, and investing options compared to 66 percent of men.
Furthermore, women (21 percent) appeared to be more driven by fear than men (14 percent) when it comes to seeking more financial education.
“For men, making money is often tied to how they feel about themselves, including their positive self- identity, and how their success is measured, which creates a greater motivation to become financially literate,” said Nusbaum. “Conversely, women are more socialized to focus on financial and family security, such as budgeting, easy access savings, debt-reduction and lower-risk investing, rather than accumulation strategies often taught in financial education.”
When asked who should take responsibility for educating the American public on basic financial matters, 75 percent of the respondents placed the responsibility for financial literacy on themselves, followed by parents and family (56 percent), teachers/school (50 percent), the financial industry (34 percent), independent third-party organizations (19 percent) and government (17 percent).
Ensuring a stable financial future is the number one motivation (67 percent) for consumers to seek more financial education, far exceeding fear of running out of money (18 percent) and envy of other’s financial success (2 percent).
“Take your education into your own hands,” said Olympic swimming gold medalist Wendy Boglioli, a national spokesperson for Genworth. “People get so busy living day-to-day that their long-term financial goals get put on the sidelines. The great value in working with a financial professional is that they can help keep you on task in meeting your goals and provide important financial knowledge.”
Boglioli provides three tips for staying motivated and on track when it comes to financial literacy:
• Find a mentor. Partner with a spouse, financial professional or a family member to help write a financial plan and overcome the emotional, psychological and financial roadblocks that can distract us from meeting our goals. Everyone needs a coach or a mentor to push them through difficult decisions.
• Track your progress. You don't have to meet all your goals tomorrow. Make a list and start crossing them off. One by one you will get inspired as the list begins to dwindle and your short-term and long-term goals are met.
• Stay focused. It's not about how much you save; it's about being confident and comfortable with your financial future. Focus on your short-term and long term-goals, be diligent and you will get to the finish line.
Genworth’s Let’s Talk website offers tips for initiating conversations about long term care and retirement planning with loved ones. Boglioli discusses being financially sound and physically strong at AskWendyB.
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