How to Improve Financial Literacy

I’m Andy Temte and welcome to the Saturday Morning Muse! Start to your weekend with musings that are designed to support your journey of personal and professional continuous improvement. Today is February 15, 2025.

Since the beginning of the year, I’ve been Musing about the definitions of and ingredients to success. Last week, we talked about the importance of financial literacy to success and how, as a nation, we in the U.S. have flunked out of financial literacy 101. In a recent TIAA Institute-GFLEC Personal Finance Index survey, only 48 percent of participants got 50% or more of Index questions correct.

Okay, so we know we have a financial literacy problem, but how do we go about fixing it? We start by improving numeracy (basic mathematics) proficiency.

Unfortunately, adults in the United States lag significantly behind adults in other developed nations when it comes to numeracy proficiency. Worse yet, over the last decade, our numeracy proficiency score has fallen 7.3 points. According to the Organization for Economic Cooperation and Development (OECD) Survey of Adult Skills 2023, the United States ranked 19th in numeracy proficiency. Finland, Japan, the Netherlands, and Norway were the top 4 countries in numeracy.

In my first book, Balancing Act, I talk about the importance of mathematical literacy as the foundation upon which financial literacy sits. Any engineer will tell you that if the foundation of a structure is weak, the entire structure is prone to failure. Any accomplished musician will tell you that if you don’t have the basics of scales, time, and form solid, learning more advanced musical concepts is difficult, if not impossible. Therefore, to be financially literate, one must be mathematically literate.

Note that I’m not saying that everyone needs to be a math whiz for financial literacy to improve. The term numeracy is defined by Merriam-Webster as the “ability to understand and work with numbers.” So to improve financial literacy, we need to improve basic math and statistics skills.

So how did we get here? I’d like to read an excerpt from Balancing Act starting on page 45 of that book.

“From an early age, most of us are told that “math is hard” or that only certain people are “math people.” As a result, we’re actively discouraged from learning the language of math. In many academic settings, math has been made to be mysterious and overly complex. I’ve personally had instructors who went out of their way to make math unapproachable—as if understanding the language of math is reserved for a special club that I needed to earn the right to enter through mental hazing and intimidation.

In reality, math is an elegant language—much more elegant and logical than English—and nearly all mathematical concepts can be directly mapped to a real-world experience or example. It drives me nuts when I hear people say, “I don’t need to remember what they taught me in math class—I’m never going to use those concepts in real life!” What’s likely happened is that those individuals had teachers who didn’t connect the dots between mathematical concepts and their experiential, real world, application.

Worse yet, there’s an entire swath of the population that’s convinced themselves that they can’t learn math. This is a fallacy and a crutch—as I mentioned before, math is just another language like English or Spanish. Nearly all of us have the ability to be multilingual.

The point I’m driving at is that we need to apply more effort as a society and as educators to making math more approachable and relevant. Why? Because our businesses and institutions are populated by millions who lack the necessary numeracy skills to be effective in their jobs. They’ve been conditioned to think that math doesn’t matter in the real world when math— the basis for finance and accounting—is literally the language of business!

If math is the language of business, then everyone who works in a business should have some level of fluency in that language. Unfortunately, we live in a world where financial literacy and numeracy are at or near all-time lows. We can turn things around, though, if we work together on the following.

First and foremost, we have to make mathematics more approachable and relevant in our primary and secondary schools. The latest data from college testing firm ACT show that in 2023, only 30 percent of ACT-tested high school students in the United States met their College Readiness Benchmark in mathematics, and this is down from 39 percent in 2019 and 43 percent in 2014. So over a decade, we’ve seen a 13 percent decline in this crucial barometer of mathematics proficiency.

We must also change the language we use with our children when we talk about math in the home. The current vernacular, that math is scary, hard, and reserved for geeks is hurting our society and economy.

Before we can substantially raise the bar on financial acumen, we need our next generation of business leaders to be financially literate. Again, this starts in our schools and in our homes. Just because “the computer does all the work” in banking and finance doesn’t mean we shouldn’t understand the mechanics of how to balance a checkbook or what debt burdens are appropriate for a particular income level.”

So back to the main point of the Muse. Can you be successful without being financially literate? Maybe, but you’re making the journey unnecessarily difficult. Remember, you are the product of your upbringing/environment plus the stack of decisions you make once you become an adult. Successful people make more magnitude-weighted good decisions than bad. Since many of the most consequential decisions in your life are financial or have financial aspects to them—housing, education, food, clothing, retirement, heck, just about everything—financial literacy, or the lack thereof, is a key determinant of whether you will end up making more magnitude-weighted good decisions than bad.

We’ll continue the discussion next week. Until then: grace, dignity, compassion.