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The 2014 Consumer Financial Literacy Survey, conducted by the National Foundation for Credit Counseling, revealed 59% of adults in the United States show knowledge about personal finance, while 73% of them believe they could benefit from advice and recommendations from financial advisors. However, the study showed 34% of the respondents said their household carries credit card debt from month to month, while 15% of them roll over at least $2,500 in credit card monthly.

Even though Americans know what financial literacy is and how it can change their lives, many of them are still financially illiterate. This is not only seen in developing countries, but in developed countries as well. Many nations around the world deal with populations who do not understand financial basics.

Let this article explain the following trends upholding the importance of financial literacy.

Differing Options

Today, banks, brokerages, credit card companies, insurance firms, and other financial service companies offer several investment and savings products. Some of their offerings differ on interest rates and maturities. Deciding on complex financial instruments with different options can affect an individual’s capacity to make a sound financial plan such as purchasing a house or saving for retirement, making decision-making even harder.

Changing Environment

Our world is expansive in nature, so is the financial landscape. There are many participants in the market and various factors can influence it, including technological advances. It can lead to diverging views in creating, implementing, and maintaining a well-laid financial plan.

Longer Life Spans

People live longer today than earlier generations, meaning we need more retirement savings and financial options.

Consumers Shouldering More of Financial Decisions

The government has shifted retirement planning to employees. Previous generations relied on pension funds for most of their retirement funding. Professionals manage pension funds sponsored by governments or companies. People were not involved with the decision-making. Although consumers did not make contributions, they were rarely made aware of the funding status or investments held by the pension. Today, employers offer workers to open a 401(k) plan and make contributions to it.

Financial literacy is significant for people to save enough for retirement and avoid high levels of debt, which can result in bankruptcy and foreclosures. Being financially literate will have a profound impact on one’s life and their capacity to ensure a brighter future ahead.