Financial Illiteracy: Who’s Most Vulnerable?

annamaria lusardi“In today’s world an understanding of basic financial concepts is equivalent to the ability to read and write,” says Annamaria Lusardi, one of the world’s foremost experts in the field of financial literacy, when recently interviewed.

Lusardi is the academic director of George Washington University’s Global Financial Literacy Excellence Center.

“The level of financial literacy is critically low, especially if we consider what is at stake,” reports Lusardi.

“From age 17, when we decide whether to go to college, we start making big decisions. Then people have to make decisions about pensions, how much to save, and how to invest their retirement. We also have broad access to credit, so we can rack up huge debts. … The research suggests that we don’t actually have the skills to make those decisions.”

Lusardi identified the three groups most vulnerable due to their weak financial literacy skills:
1). “The young are vulnerable because they have no experience.”
2).  “While the young know little and acknowledge they know little, the elderly also know little but they think they know the most. That makes them an ideal object for scams.”
3). “Interestingly, around the world we also find that women have been left behind as market economies develop.  In many households, it’s the woman who makes the domestic decisions—planning for a child’s education, taking care of aging parents. So teaching a woman to be financially literate will help her and help her take better care of her family.”

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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