A new study by Experian has highlighted significant financial knowledge gaps among Americans, particularly younger generations, that are contributing to costly errors.
The research, which surveyed 2,000 US adults, found that three out of five respondents believe their insufficient grasp of credit and personal finance has led them to make expensive financial mistakes.
Among those acknowledging mistakes, 60 percent reported losses exceeding $1,000. The issue is most acute for younger demographics, with 71 percent of Gen Zers and 70 percent of millennials admitting that their lack of financial knowledge has been financially detrimental. That includes 29 percent of Gen Zers and 38 percent of millennials who say they experienced financial losses of $5,000 or more.
The survey also shed light on the disconnect between the need and availability of financial education. Despite 78 percent of adults advocating for mandatory personal finance courses in high schools, only 25 states currently require such education, as reported by advocacy group Next Gen Personal Finance.
"Understanding credit and personal finance is paramount for financial well-being, especially for younger generations navigating today's financial landscape," Christina Roman, consumer education and advocacy manager at Experian, said in a statement.
““Financial mistakes, such as missed payments, overpaying on interest or simply not understanding the terms you are agreeing to, can come at a serious cost for consumers,” she added.
The study also revealed that two-thirds of adults are eager to enhance their understanding of personal finance, with interest even higher among Gen Zers and millennials at 80 percent and 79 percent, respectively.
Experian’s survey found adults most commonly acquire financial knowledge from family members (36 percent), educational institutions (33 percent), or online research (32 percent). When it came to trusted information sources, financial advisors led the pack with 48 percent, followed by financial institutions like banks and credit unions (45 percent) and national credit reporting agencies (37 percent).
Social media platforms also play a significant role in financial education. Approximately 30 percent of adults in the survey said they use social media to learn about personal finance, with 52 percent of Gen Zers and 47 percent of millennials turning to platforms like YouTube, TikTok, and Instagram.
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