A new report from the Global Literacy Excellence Center shows that the average American scored less than 50% on a financial literacy test. If that isn’t scary enough, on average, Gen Z correctly answered only 37% of the index questions in 2024.
This is more than just disconcerting. With a decrease in the number of citizens covered by corporate pension plans and the fact that social security is only a supplement to other retirement income, self-help is increasingly important.
What is the solution to this problem? A recent Forbes article suggests that employers should create financial wellness programs. That’s all well and good, but not everyone participates in a traditional employer/employee environment. All of us need to understand the importance of savings, and this is something that should be taught as early as possible, both at home and at school.
Warren Buffett correctly warned that, “If you don’t find a way to make money while you sleep, you are destined to work until you die.”
In keeping with Mr. Buffett’s advice, it should be clear that everyone is going to have to take more responsibility for their financial future. This means spending less than you earn, investing for the long term and seeking professional advice as needed.
All comments and suggestions are welcome.
Walter J. Kirchberger CFA
