I was recently reading the New York Times and saw a piece by columnist Ann Carrns titled “Americans Are Getting Less Money Savvy” from June 15th. It was saddening to read that researchers see a worrisome trend in financial literacy, leading to poor decision-making and financial fragility. According to the report, many consumers still cannot come up with $2,000 for an unexpected expense, such as a medical bill or a car repair.
This statistic is particularly striking because it hasn’t changed much since the 1990s. I remember when the Consumer Federation of America launched the “America Saves” campaign with a goal for everyone to save $2,000 by the year 2000. Here we are 26 years later, and the need is just as urgent.
Having assisted a team driven by a state senator to make a personal finance course a graduation requirement in Utah, I have seen firsthand how impactful this education can be. It was a 10-year process to convince politicians and the public, but it was worth it. A study by the state auditor concluded the course was well worth the appropriation and teacher training, and previous analysis by Carrns suggests that financial education in high school can provide benefits equal to $100,000 per student over a lifetime and increase credit scores by 30 points.
If you have not yet put away $2,000 for an emergency fund, I encourage you to do so as soon as possible. Your financial health is truly at risk without that safety net.