I confess, I am a financial geek. I enjoy investing our retirement accounts. I enjoy analyzing ways to legally reduce our tax liability. I try to maximize our fixed income interest. I learn about new income opportunities.
I find almost none of my friends and family have the same level of interest in finances. In fact, I have learned some have very little simple financial knowledge and almost no complex financial knowledge.
Lack of financial literacy can lead to issues and sometimes catastrophes.
I remember many years ago, a friend told me her strategy for maintaining a higher lifestyle was to max out her credit cards and pay only the minimum each month. She rented a high end apartment, furnished it via credit card debt, and bought a new car. Within a year, her expenses, including minimum credit card payments, were more than her net monthly paycheck. For reference, she was a new hire chemical engineer and paid very well. Her solution was to get a second job as a waitress to pay for her expenses. I tried explain to her that cutting back on expenses would help also, but to little avail.
Financial literacy would help people avoid punitive debt problems such as minimum credit card payments, payday loans and exorbitant student loans. Financial literacy may also help reduce the incidence of financial scams since many people don't recognize financial red flags of scams. This leads to people being tricked by bank phishing, catfished for money, or involved with a hobosexual partner. I've seen this happen to otherwise very intelligent people.
This is not financial advice. Please consult a professional advisor.
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