Americans have a bit of a superiority complex when it comes to grading their financial prowess. Genworth’s latest Psychology of Financial Planning research reveals that more than half (52%) of Americans gave themselves an A or B grade on their saving and investing knowledge, while giving the average American a failing grade of D. What nearly everyone (97%) can agree on, however, is the importance of financial literacy and the fact that they don’t have enough (88%). In fact, 58 percent of respondents blamed 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 focuses 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. Why? Financial decisions, behaviors, and actions are highly motivated by emotional and psychological factors,” says Dr. Barbara Nusbaum, a New York-based psychologist and money coach. “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 motivation to become financially educated vary by individual, with particularly significant differences between genders. The data reveals 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%) appear to be more driven by fear than men (14%) 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. 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,” explains Dr. Nusbaum.
The Accountability Factor
When asked who should take responsibility for educating the American public on basic financial matters, the vast majority (75%) of respondents place the responsibility for financial literacy on themselves, followed by parents and family (56%), teachers/school (50%), the financial industry (34%), independent third-party organizations (19%) and government (17%).
Ensuring a stable financial future is the number one motivation (67%) for consumers to seek more financial education, far exceeding fear of running out of money (18%) and envy of other’s financial success (2%).”Take your education into your own hands. People get so busy living day-to-day that their long-term financial goals get put on the sidelines,” says Wendy Boglioli, national spokesperson for Genworth. “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.
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