Financial illiteracy among Americans, and beyond...

Starting this new thread based on some posts I saw in other PDFs. If there’s already an existing one and I missed it, please merge them.

I hear all the time that Americans are a financially illiterate nation. People claim it's because of everything from a failing school system to leftovers from the old regime, or just plain laziness when it comes to learning, plus a lack of decent financial education available...

What's your take? How do we fix this mess?

Please share any examples from your own circles that either support or debunk this idea...

It’s honestly funny how much less informed Americans can be when brokers and financial advisors have basically taken over everything—even filing your taxes. The average Joe doesn't always have the extra cash to pay for those premium services, so he ends up making his own calls, which might make him look "less savvy," but at least he isn't getting fleeced by middlemen.

Nathan Evans78 said:It’s honestly funny how much less informed Americans can be when brokers and financial advisors have basically taken over everything—even filing your taxes. The average Joe doesn't always have the extra cash to pay for those premium services, so he ends up making his own calls, which might make him look "less savvy," but at least he isn't getting fleeced by middlemen.

The reason we don't deal with intermediaries is quite simple—in the USA, everything is strictly monitored. There isn't a massive demand for consulting services because, frankly, it would just be throwing money down the drain.

In the States, people pay for these services out of pure caution; they understand that the system actually works, the chances of slipping something illegal past the authorities are slim, and the risk-to-reward ratio is heavily stacked against them.

Take the fear of the IRS, for example. Over here, people tend to treat the local tax authorities like a joke, especially within entrepreneurial circles, accounting firms, auditing agencies, and tax consultants.

If you look at our local business forums, you see posts every single week from people claiming they "got away" with something regarding their taxes, leading them to believe their lucky break was actually legal. 🤣

Essentially, what we have is a model characterized by an extremely high nominal tax burden paired with very little actual oversight.

Exactly—nobody's really sweating the IRS or any legal fines around here. Even though we read all these stories about some entrepreneur getting hammered by taxes, regular folks barely ever get hit. So, I guess there's just zero need to stress over knowing all the technicalities or whatever.

If the author was talking about being smart with money—even if it looks like we're all clueless sometimes—I'd say everyone from this part of the world is actually pretty sharp. Like, look at why so many people make it when they move abroad. It's because they take all that survival experience from growing up here and apply it to a more organized system. You could debate the specifics of that success, but generally, people hold their own out there. If someone’s spent time in the USA and hung out with locals, things will probably click for them pretty fast. I'm talking about your average American.

urbanwalker72 said:The reason we don't deal with intermediaries is quite simple—in the USA, everything is strictly monitored. There isn't a massive demand for consulting services because, frankly, it would just be throwing money down the drain.

In the States, people pay for these services out of pure caution; they understand that the system actually works, the chances of slipping something illegal past the authorities are slim, and the risk-to-reward ratio is heavily stacked against them.

Take the fear of the IRS, for example. Over here, people tend to treat the local tax authorities like a joke, especially within entrepreneurial circles, accounting firms, auditing agencies, and tax consultants.

If you look at our local business forums, you see posts every single week from people claiming they "got away" with something regarding their taxes, leading them to believe their lucky break was actually legal. 🤣

Essentially, what we have is a model characterized by an extremely high nominal tax burden paired with very little actual oversight.

I agree with this 100%, though I suspect I didn't frame my previous point quite as clearly as I usually aim to. It really brings up a different dilemma: what happens to all those business school grads entering the workforce? For them, these kinds of consulting roles would feel like a complete slap in the face as they try to kickstart their careers. 😁

Chris Myers said:Starting this new thread based on some posts I saw in other PDFs. If there’s already an existing one and I missed it, please merge them.

I hear all the time that Americans are a financially illiterate nation. People claim it's because of everything from a failing school system to leftovers from the old regime, or just plain laziness when it comes to learning, plus a lack of decent financial education available...

What's your take? How do we fix this mess?

Please share any examples from your own circles that either support or debunk this idea...

Honestly, I think the core issue is that there’s zero mandatory education regarding life's finances. So, my finger points straight at the school system.

There’s no civic education. Nobody learns how taxes actually work, how surcharges hit your paycheck, how government agencies and services "operate," or who does what and why...
What are your rights as a citizen, a consumer, or an employee?

The school system offers absolutely nothing mandatory on these topics.

Sure, there might be a Politics and Economics class in senior year of high school, but nobody ever actually taught us anything useful about it...

How do we fix it? Instead of religious studies in high school, introduce actual civic education. A subject you'd attend at least once a week for two years minimum.

But then again, the people making those calls have a conflict of interest. It doesn't really serve them to have an informed nation.

The real kicker is that the average person doesn't even move out of their parents' house until they're in their thirties. By then, they have absolutely no clue what it actually takes to live an independent life.
If you got kicked out at 22 or 23, you’d be forced to learn the hard way. A year or two of trial and error would teach you how to manage a budget... and you'd realize pretty quickly just how expensive everything really is.

But instead, people end up living under their parents' roof for years even after they start pulling in their own paychecks. They blow their money on designer bags, going out, or a flashy car—just exaggerating here, obviously. Then, once they finally settle down with a partner after a wedding or whatever, they act totally shocked when the bills actually start hitting the mailbox.

Plus, everyone loves using cash. Since nobody bothers with a budget tracker or anything, half the crowd has no idea where their money is even going... they just wonder why it disappears so fast. Nowadays, since most things are paid by card, your bank app basically gives you a full breakdown of your spending, which makes things slightly easier to track, at least.

Chris Myers said:Starting this new thread based on some posts I saw in other PDFs. If there’s already an existing one and I missed it, please merge them.

I hear all the time that Americans are a financially illiterate nation. People claim it's because of everything from a failing school system to leftovers from the old regime, or just plain laziness when it comes to learning, plus a lack of decent financial education available...

What's your take? How do we fix this mess?

Please share any examples from your own circles that either support or debunk this idea...

I once asked a friend what his Exxon rate was on a 30-year mortgage; he just replied, "The interest is 3.xx%."
People clearly don't grasp the distinction between an annuity and a simple interest rate.

I told another buddy that $10 a month for a debit card and online banking was a massive rip-off, and he basically told me I had no idea how little $10 actually is.

Then there's someone I know who has spent years just barely scraping by, perpetually stuck in the red with loans or credit balances in the $15k-$20k range.

It seems to me that a significant portion of the population lacks even the most elementary financial literacy—which, frankly, makes it easier to understand why the US is in the position it’s in.