072 - What's Your Financial Intelligence Score And How It Rank Among Others

I think we can all agree that there’d be a correlation between financial smarts and a person’s financial well-being. That just makes sense, right? 

So now how would you rate your financial intelligence? 

Do you know you have more to learn or think you’ve got it all figured out?  Maybe you know more about certain topics but  aren’t so great at others.  

Most people think they’re good at finance and yet have lots of debt and financial stress. This doesn’t add up. 

It’s even more alarming when you look at the actual results from tests that are conducted each year. 

Today we’re going to go over sample questions and statistics to help you gain clarity on where you stand with your financial knowledge.

 Click here to see the survey data and take a mini quiz.  

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Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Transcript

Welcome to roaming returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions. I think we can all agree that it makes sense that there'd be a correlation between financial smarts and a person's financial well-being, right? So now how would you rate your financial intelligence? Do you have more to learn or think you got it all figured out? Maybe you know more about certain topics but aren't so great in others. Most people think they're good at finance and yet have lots of debt and financial stress.
This doesn't add up. It's even more alarming when you look at the actual results from tests that are conducted year to year. So today we're going to cover sample questions and some demographic statistics to help you gain clarity on where you really stand with your financial knowledge.
They tabulate the results and then they publish it every year. It's been going on for, I want to say, since 2017. So is that seven or eight years, I think? And? And what it shows you is, holy hell.
We'll get to why it's holy hell in a minute. But I want to give you a couple of example questions. See if you can get these right.
I'm hoping you can because you've been listening to us. You have some financial literacy, I'm hoping, maybe a smidgen or more. Question.
Suppose you had $100 in the savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? More than $102, exactly $102, less than $102, do not know, refuse to answer. Those are the five.
I can't even believe those two are, the refuse to answer is an option. Those are the five. But OK, let's break this down.
$100 in a savings account, interest rate 2%, five years. You don't even have to know math, really, to common sense this question here. To know it's more than $102.
It has to be more than $102. That doesn't even make sense. But these are the questions on this thing.
They have some retirement ones that are a bit trickier. But since none of us are actually in retirement, or if you are, then you probably know the retirement questions. If you are retired, you might want to look into it.
Just type in, in Google, financial literacy report 2024, and they'll bring it up. And then you can look at some of the examples of the questions they ask. I mean, or we could just link it in the show notes.
Could probably do that, too. I don't want to do all the work. Oh, my.
Question two, imagine that the interest rate on your savings account was 1% per year, and inflation was 2% per year. After one year, would you be able to buy more than today, exactly the same as today, less than today, do not know, refuse to answer? Those are the five answers. Two steps backwards, one step forwards.
So again, not even maybe just knowing basic arithmetic, or the math, as they call it, over the maths. Yeah, so it's obviously it's less than today. But these are examples of questions that are asked.
And we'll get to the results here after this third question, because dude. How many questions are on the test? 24. Oh, so you only took three? No, 28.
28. But they only had examples of three online. So I guess they're trying to keep it hush-hush so people know the answers ahead of time to skew the results.
Did you take it? No, you can't take it. It's something that they actually have to send to you. But I thought it was an interesting topic, because it was like 3,000 and some respondents that they mail them to.
So that's a pretty good way they broke it up. They had mailed it to different sexes, races, ages. Demographics.
So all the demographics were spread out. So you have a pretty wide sampling of general America. OK, question three.
Do you think that the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund. Obviously, you have true, false, or do not know or refuse to answer. This is the diversification thing that we've talked about.
And we said that Warren Buffett's full of crap when he says diversification's for the lazy or the stupid or whatever he said. A safer return? I don't like this question. It's false.
One stock versus a stock mutual fund, or if you want to think like an index fund, is obviously riskier than an index fund. I wish they wouldn't have mutual on there. If they would have said a fund, I would be... So those are three examples of questions that I thought were like... Pretty straightforward.
Super easy. But OK, what if I told you that only 30% of the people that answered these three questions correctly? So out of the 3,700 and some things they emailed out or mailed out, only 30% of the respondents answered these three easy questions correctly. And what makes it even worse is that there's a knowledge gap.
The knowledge gap from these questions is actually compounded by people have a false sense of financial knowledge. The people on the survey gave themselves a 5.1 rating out of seven. For their financial literacy.
Yeah. So you have 70% of people not knowing simple everyday questions, but who think they are correct. And this is a troubling statistic, but it's also a troubling trend going on in America.
Like if you're wrong, you're still right type shit going on. Well, that's the problem. You can't fix something if you think you're not wrong or there's not something wrong.
And that's where you need to kind of know, especially if financial literacy is one of the things or... I mean, honestly, it's kind of not surprising why people's finances are so out of whack if those really are the statistics. That's crazy. See, I was blown back because they actually have a sample thing online that I could find where you can answer five questions.
The three that I just brought up were three of the five questions. But all five questions were, and I'm not an expert, a financial expert anyway, but they were super simple and I got all five right. And like the fact that 70% of people are missing these questions is ridiculous.
Well, I do like the fact that they're generalized. So it's not about crunching numbers. It's more about common sense because financial literacy, like the basic foundation of it really is common sense.
Are you heading in the right direction? If you make X number of dollars and you spend X number of dollars and you spend more than you make, are you losing money or making money? Like that's simple, simple logic. Okay, before we dive into the results, we have to... Okay, there's different tiers, like people who answered 22 or more questions of 28 correctly had a high level of financial literacy. The very low level was those who answered seven or fewer of the 28 questions.
So like they do have it broken down in between. In the tiers. Very low is seven or fewer.
Low is like, I think eight to 13, 14, exactly half is just a whatever. And then high is 20, wait, 16 to 21. And then very high is 22 to 28 or something along those lines.
They break it up. Okay, in 2024, the most recent survey they had, U.S. adults correctly answered only 48% of the 28 index questions on average correctly. So the trouble with this data is that compared with those with a very high level of financial literacy, again, those who answered 22 or more correctly, and you compare that with those who have a very low level who answered seven or fewer.
The ones that answered seven or fewer are twice as likely to be debt constrained, three and a half times more likely to be financially fragile, which means they don't have enough money. Like if your car gets a flat tire or something, you literally can't eat. Four times more likely to lack one month of emergency savings, three times more likely to be not at all confident in their retirement income prospects, and three times more likely to spend 10 plus hours per week on personal finance issues.
And I think, and I, this is just. 10 hours a week on finance issues. That's it, yeah.
Holy crap. Do you know how much time of your waking hours? That's a quarter of your working hours. Well, that actually broke it down.
I said, what I thought about this, and I had to do more research. What I find even more disturbing than those statistics that we just provided there is that this low level financial literacy, it only, like because these tests are actually measuring working knowledge, it's not like math or anything. It's like basic like budgeting and finances.
It's like basic common sense. So the fact that there's so many people missing so many of these questions, and if you miss so many of these questions, you have these things where you don't have money for a flat tire, you don't have an emergency fund set aside, you have high amounts of debt. It's fascinating.
I mean, from a statistical component, but like from an actual person component, people probably don't find it fascinating. It's sad. I would say it's sad from that perspective.
Okay, so then we dug in. So I dug into the results a bit further. Borrowing and debt management has been the area of greatest financial literacy each year since the survey was first administered in 2016.
59% of the borrowing questions were answered correctly. In 2016, it was 61, so it's only down like 2%. Debt tends to be a feature of personal finance common across like all sexes, colors, locations.
So people are more familiar with debt because they're in it usually. You are familiar with what you experience for sure. Savings and consuming are the two other areas where financial literacy is above average.
In 2024, the average was 48%, so if you answered these sections higher than 48%, you're considered above average. And the ones that were below average were go-to information sources, I guess like Yahoo Finance, Bloomsburg, CNBC, whatever. Investing and insurance were the areas that were below average where they answered less than 48% correctly.
So insurance kind of makes sense because it's crazy. You could be an insurance broker and not know insurance questions because they're just insane. But where you go to find information and investing, there's no reason why that should be as low as they are.
Investing, I guess it kind of makes sense if you don't know where to go to get the information, then how are you going to invest? Well, I think the problem is that there's so many sources out there and you really don't know who's actually credible. And then it's that overwhelm and then that analysis paralysis. And then a lot of people just like head in the sand it.
I get it. But at the same time, like how much of your life is made up by finance? A crap ton. Like it literally is a common denominator amongst everything.
And we were just talking, like I didn't even realize how before I definitely, I guess because of my education with the math and everything, like I get the numbers. But now that we've been digging more into the finance components, like I'm actually falling in love with finance, which is weird. Like I never thought that would be something I'd say.
And I get excited about it. Like I just actually got approved for a different credit card yesterday. And the only reason I'm doing that is because I was assessing from that episode that we did before about the credit cards and which points like are the best.
Because it's like when you look at your spending and it's like why you're throwing money away by not having a credit card to utilize for points. Yeah. So the one she got has 5% on gas.
5% on gas, 3% on groceries, 3% on restaurants and 1% on everything else. Because we're going to be leaving in the van here in the next couple of months. Having a credit card that gives us back a decent percentage for gas was pretty important.
And then we're probably going to find one that gives us like 5% back on groceries. Because those will be our two biggest. I have a plan for that.
Financial spendings on the road will be groceries and gas. So if we can get good cash back. If you didn't listen to that episode, you should go back and listen to it.
Because yeah, the basic principle was that you evaluate what categories you spend on. And then you just like pick your credit cards accordingly so that you can actually. If you do it right with those high interest, like a lot of them, you can get 5% in different categories.
If you stack them right, you can basically spend your normal expenses and then get an entire month for free by the cash back points. The only caveat is you cannot have a balance carried over. You have to pay it off each month.
So that's why I said it's what you normally spend. You normally spend say $200 on gas. So you fill it up with your debit card.
So what's the difference between putting on a credit card? And then when you get your credit card statement, you just pay the $200. You're paying the same amount, but you're actually getting 5% back with the credit card approach with, I don't know, because I'm thinking maybe no fees, but there might be. No, there's no fees.
There's absolutely no fees unless you have a fee carrying credit card. They don't penalize you for paying it off. And I just have it auto pay.
But what I plan to do is I'm actually going to cancel one of my other credit cards. But from what I understand, it's better for your credit score. Like I have an excellent credit score.
So I wasn't going to apply for three cards at once to switch over what I was doing. I'm going to wait, get that card, cancel that one, see what happens to my credit score, and then go from there, add the next one, get rid of another one. Yeah.
So that's like that is a financial literacy component that we're actually implementing day to day. And another one is we actually have a budget now that we're, well, we've been kind of kicking it around a little bit. But we actually have one now online where we're just keeping track of our finances for the month.
And we're going to try to be accountable on it. It's a little difficult with the condo expenses, but we're just going to throw stuff in there and categorize that out so I can. So that's another component of financial literacy.
Know what you spend each month. I mean, that seems like common sense, but I don't know. If you don't know, you can't make any changes.
OK, back to the survey. Over the eight years this has been administered, one of the there's like a couple of consistent points. One of them is that financial literacy amongst women lags out of men in 2024.
Men correctly answered 53% of the survey on average, and 23% of men demonstrated very high financial literacy. Again, answering more than 22 correct to be in the very high group. I think it kind of makes sense because I see a lot more like women in finance stuff popping up because I imagine it has to do with like older expectations where men were supposed to take care of the finances and the women didn't.
Or men have more math brains and women usually have more social sciences brains. No, I don't. I don't know what's it like.
I don't like trying to determine why women are at worse with financial literacy. It might be just. I would think they'd be better with the whole shopping component.
But I guess that's an impulse thing. That's like next week's next week's podcast is going to cover the impulse stuff. I found a really.
Yeah, that's pretty fascinating. Interesting topic that we're going to cover next week. But women, yes, they do impulse buy a lot more than men.
I will say, though, not every woman sucks and not every man is good, because when I met Tim, it was completely the opposite. Whatever. He had like five credit cards.
He was paying like late and min balances and getting all sorts of fees. And I was like, what the hell is wrong with you? I basically like shoved my foot up his ass and was like, yeah, we're doing this. Whatever I'm saying.
Like I was like if I'm not an expert, but I know what to avoid because I've been there. I just don't understand paying fees. No speaker.
Women were significantly lower in twenty twenty four. They only answered 43 percent of the questions correctly. So 10 percent less and only nine percent, which is 14 percent less than men.
Nine percent of women demonstrated a very high financial literacy level. So there's a huge like that's if you remember statistics, that's a very big statistical significance. Yeah, it's that high.
Ten and fourteen. They they when they administered the test, they gave the test to the same number of men versus women so that it's that bad like that. There's that big a discrepancy is very statistically significant.
OK, then we break it down according to race. Financial literacy levels amongst Asians and whites were about the same. Asians correctly answered.
Fifty four percent of the survey questions on average in whites was 53 percent. However, a slightly greater share of Asians demonstrated very high levels of financial literacy. Twenty five percent compared to the twenty one percent of white people.
Well, that makes sense. Asians who are good at math, Asians should be good at math. It's a stereotype for a reason.
Yeah, financial literacy levels amongst blacks and Hispanics were significantly lower than Asians and whites. Like that's again, the blacks only correctly answered. Blacks correctly answered only 38 percent of the survey questions on average in Hispanics was thirty seven over one thirty six.
Did you write that wrong? Oh, thirty six. She said that wrong. Oh, sorry.
Thirty six. Blacks correctly answered. Thirty six percent of the survey questions correctly and Hispanics was thirty seven percent.
So about the same for the both. Over one third of both black and Hispanics demonstrated very low levels of financial literacy. That's a that's a huge block.
So that's something that needs to be addressed. And I have a couple of suggestions at the end of this, like how we can address these. That's a big problem.
Like one third. Like, wow, that's sad. Currently, the U.S. population, adult population spans five generations.
Oh, yeah, the gen. Oh, this should be interesting. With Gen Z now ranging from age 18 to 26, financial literacy tends to be low across all generations, but particularly amongst Gen Z, Gen Z only correctly answered only thirty seven percent of the survey correctly on average in twenty twenty four.
And then as you as you go from Gen Z towards the baby boomers, it actually progressively gets higher amongst each older generation. Gen Y correctly answered. Forty six percent of the survey questions, while the other generations correctly answered 50 percent or more.
The highest was the boomer was the baby boomers who answered fifty four percent correctly. Now, I would actually be curious to know if that is just based on the fact that the longer you've lived because each generation obviously has more knowledge and has more knowledge and experience. Exactly.
That's what I was going to say. And while you think Gen Z, they literally just got out of the house. So I don't know.
They don't know how all that crap works, how all that works yet. So they will get there. Hopefully the share of each generation demonstrated low levels of financial literacy.
It's progressively greater amongst younger generations is basically just the inverse of what we just said, ranging from 13 percent of the silent generation, which I guess is your great grandparents, if they're still alive, to 39 percent of Gen Z who had low levels of financial literacy, which makes complete sense. Like we just said, they literally just got out of the house. They're not going to know as much as other generations that have been out of the house and living and working and paying.
And yeah, life. But it's fascinating. OK, financial literacy also on this this this this survey test quiz, whatever you want to call it, it showed that financial literacy also tends to vary with other demographics in addition to gender, race and ethnicity and generation.
For example, financial literacy tends to be greater amongst those with more education, those who have received financial education, those employed or retired, and those with higher household incomes. It just makes sense because if you like a higher interest in finance, if you're there living it. Yeah.
Or if you have a high, like a high income, you have like accountants and lawyers and things of that nature that explain things to you. Well, I would absolutely hope if you have a high level of financial education, like you should be financially educated, right? Sorry. And be able to ask, answer these questions.
Got dust, we had dust everywhere. So I got dust in my throat. OK, in addition to that, this survey had like core questions, which is like the ones we examples that we asked at the beginning.
The survey also contained questions that are indicators of financial well-being that made it so they could actually compare like different groups of people. So they basically asked the questions. I don't know if they were leading questions because I, again, I don't have the full survey because if you ever took like polling or stuff like that, they can ask leading questions to get the results they want.
So I don't know like. Boy, do you know what else too? I've read a lot of books that talk about like race and gender thing. If they ask you what race and gender you are before you take a test, if you have any complex of inferiority, it actually diminishes your test results because of the bias that exists.
As opposed to if they ask it at the end, it's actually very, very interesting. So that very well could be skewing some of this data as well. It could be.
They basically asked questions so they could get results that they could compare, like they wanted to compare financial literacy and financial wellness. They asked questions so they could actually get results that they could then lump into different categories to compare them amongst generations or sexes or races. Anyway, whatever the case may be.
In January 2024, 27% of US adults reported that their debt and debt payments prevented them from adequately addressing other financial priorities. That means if you have debt, you can't actually invest or save or anything like you can't do anything other than pay the debt down. And 30% said they are financially fragile.
That means they're not confident they could come up with $2,000 if an unexpected need arose within the next month. 39% don't have non-retirement savings sufficient to cover one month of living expenses. That's our emergency fund that we've mentioned at least 20 times throughout the episodes.
So all these results point to the financial struggles many households are facing. It's not surprising that 20% of US adults typically spend 10 or more hours per week thinking about and dealing with issues and problems related to their personal finance for that reason, because it is like a cinder block with a rope attached to your neck and you're on a bridge whenever you're like, and if you have high debt, it gets bad. Like, you know, when you start sinking, it's so hard to get out.
Because I had high debt years ago. She mentioned that I had a bunch of credit cards and they were all, not all of them. I think I had three of the five maxed out and like I was making minimum payments, but the minimum payments literally wouldn't bring the balance down.
Yeah. Because the interest rate, like it's like I have, I'd have a two, like say for example, I'd have a $2,000 credit card and I'd be making the minimum payment of $50 and all that paid for was the interest. And in some cases, it would actually, when I paid the $50, it wouldn't even bring it below like the max limit.
Because with the interest, it would bump it up to say 2054 or something like that. I paid a $50 minimum payment and it'd bring it down to 2002, but then you'd have the next, cause they do it day to day. Credit cards, they accumulate your interest day to day.
And then at the end of the, at the end of the month, they'll just put it all on there. So it would go from 2002 up to like 2058. So I was making minimum payments and I, my balance was actually going up each month.
It was, it was weird. And so I know what I'm talking, like I've been there. I've been in the, the, the, the portion of the population that was like, oh.
Well, and then you used to have late fees on everything too. And I imagine it's because you didn't want to even look at that stuff because it was depressing, right? I had late fees because I was living paycheck to paycheck. So when I got my paycheck on Friday, I would make a payment.
But like the, the, the due date was like on a Wednesday or something like that. So it was, it was bad. I was really bad.
So like, I'm pretty knowledgeable in like the negative side of finances and financial literacy. So what they found is that on average, most U.S. adults typically spend eight hours per week thinking about and dealing with issues and problems related to personal finance. Those with a very high level of financial literacy, again, people that answered 22 or more questions correctly only spent about four hours compared to 12 hours amongst those that answered seven questions correctly or less with low financial.
That's three times the amount of bandwidth a week. And they also just for giggles, I guess they asked how much of this hours occurred at week and on average, the time spent on personal finances in the workplace amongst those with low levels of financial literacy was seven hours per week, which was basically one of their working days was spent each, each week at work researching or playing on the web, trying to figure out their finances. So that actually hampers productivity because you're spending one of your days worrying about your own personal shit at home.
And then I would imagine it prevents you from actually leveling up or getting raises and pay raises and all those other things, promotions because you're absorbed by your finances. So it's kind of like it all, poor finances does trickle into all other categories of your life and basically creates hurdles and roadblocks. And that's the whole point of this.
So what could we, could we, or should we be doing about this topic? Getting educated. Um, this, it made like reading through all this and made it clear to me that we need to actually have a targeted, targeted classes or targeted courses or targeted initiatives, whatever you want to call it, that actually just stress financial literacy. And I would think one of them would be in high school and in college.
I was going to say, I actually think you should hit people like in the home before even school starts through like activities. And then obviously elementary school, middle school, high school, college, all of it. And then what I've noticed too is like people don't want to talk about finances or they're embarrassed.
So a lot of couples don't share things. So in my research in this, I actually was able to find there was, um, one country that actually reported, um, that they actually implemented, uh, courses in, um, grade school and high school and middle school. And that was Norway and Norway did really, really well on this survey across the board.
So I guess Norway, the, like they were, I think like 40 or 50% higher than the average country on the survey, because they actually start at a young age saying, here's, um, what debt is, here's like how much, what interest is, here's what investing, like what entails investing. So they started at a young age. So I think most countries should try to implement something similar to the before you have the crushing stress of life, Norwegian strategy, which is educate.
You need education. Yeah. Cause if you get the habits and stuff dialed in early, before you have all the stresses of all the other crap, you like default back to good habits and habits really are.
Cause like, I will tell you right now, the reason Tim was in a lot of the debt, again, these habits tend to go correlation. Tim bought most of his food stuff from grocery stores, like, or not from grocery stores and eating out. And it's like, cause where I live, there was a pizza shop that was like a block away that had really good food.
So I'd eat there probably three or four times a week. And it was like probably three times as much as how I just drove to the, um, the local grocery store giant and bought the same food. And we're just talking about drinks.
Like if you go to a convenience store for a soda versus, or those end caps at the grocery store, Tim used to stock Coke in grocery stores. And he will tell you that the prices, the price disparities insane. Yeah.
When I worked at Coke, um, they always stressed two things. One thing they stressed was make sure the, the, the, the, the little end cap or, uh, the cores that by the registers were packed. And they always stressed to put the oldest stuff in front and the new stuff in the back.
That was the two things they really stressed. But the end, like the, the, the, the core by the register was the thing they stressed the most because they could charge a dollar 70 for an individual 20 ounce. As opposed to if you went and got like a two liter, which is, I don't know how many hours, a hundred and some ounces, 120 some ounces, which is probably seven or eight of those 20 ounce drinks.
It's like 99 cents as opposed to one 70 or one 80 or two 29, whatever the case would be when it's in the cooler. And you can actually, and we actually, um, there was a time when we actually had the 20 ounce bottles in six packs and the six packs were doing like, they would be two for five or two for seven. So you could spend $7 and get 12 of them, or you could spend a dollar or $2 and get one.
So like they, they, they're really smart about their, their marketing and advertising in that way. They know that people make impulse decisions when they're by the register because they're standing there with nothing to do. They're bored.
So they look around, they'll buy chocolate bars or they'll buy Cokes or whatever. So that was a huge learning experience when I worked there. I was like, Holy crap.
They are just, they are just making hand over fist. I mean, it makes a lot of sense. And like my cousin gave me like two bucks one time cause I did something and he's like, here, buy yourself a bottle of water.
And I was like, First of all, the whole reason I don't buy bottles of water is because they cost two dollars a bottle of water. Like, no, I'm going to go home, I'm going to use my filtration system, and I'm going to carry water with me. Like, we did, we talked about before about how much people spend on just bottled water.
It's insane. Yes, when you could spend, you could actually buy a filtration system of some sort and have better water than bottled water continuously for the same price for a year, but then after a year, obviously you're saving money. We'll talk about, like, I think the reason people fall into the convenience trap in next week's episode, because stress is a big component of that.
Actually, well, we'll get to it next week, but what I'm finding is it's not really stress, it's mentality. But, okay, point two. Some demographic groups, such as blacks, Hispanics, as well as women, they had much lower levels of financial literacy, so it's very important to implement programs specifically targeted to black people, to Hispanic people, to women.
So, you got to go out and find the groups, and then you got to find the groups that actually have interest, and you got to do, like, I don't know, night courses, or online courses, or seminars, or even, like, those videos that I hate that are attached to an email. Whatever the case may be, you have to target these specific populations, because it's not, like, you can't give, say, an inner city person a ruler, a farm person's ruler. Rural.
Rural. How come I can't say that word? I don't know. You have pronunciation issues a lot.
Well, you can't, like, if you live in the inner city, you can't say, hey, here's the same course we gave someone that lives on a farm that's, like, 60 miles from everything, because there's completely different groups. So, you actually have to specifically target the education towards the group that you're trying to improve their financial literacy on. And the third thing that I came up with through all this is, comprehending risk is an area where financial literacy was low across the board, white, black.
Honestly, I don't even think most people understand risk. We talked about it before. Risk is really your own choices.
But the reason I found this more alarming than the people that did the survey was, they just had, like, a blurb about risk because risk actually extends beyond your personal finances. Health is an example, education is an example. Risk is well beyond just personal finances.
Like, not educating yourself in finances is a risky choice. So, if you actually improve knowledge pertaining to understanding what risk is and how to mitigate risk, it would actually have benefits beyond the financial sector, and it would actually benefit individuals and society at large. So, like, I can't, like, comprehending risk is something that just came naturally to me once I actually got balls deep into stuff, because you don't want to lose your money or you don't want to lose people.
Well, that's what I'm saying. Like, risk really isn't what everybody thinks it is. And if you... You don't want to lose, like, 12 years of your life because you're fat or you have high blood pressure.
So, like, risk just is... It's more than just finances, but finances touches everything. So, it's... Again, we talked about it in the risk episode that we did. But from what all of this shows me, like, I keep telling Tim, like, I really want to make some courses and, like, just the basic... I think a basic finance course would just be amazing.
Like, how does money work? How does interest work? Well, first be what is money, because money is actually... And how is risk? Money is not what people think it is. Absolutely not. It's what you do with it.
Now, there are ways where you can actually have better financial literacy, which would be to actually expand your comfort zone and actually take on more debt or carry cash or things of this nature. So, you become familiar with money or you become familiar with debt or you become... Or invest more so you actually do more research. But if you implement some of those tactics as an attempt to try to correct bad habits, like, I think the habits kind of need to come first.
But I think the education is probably... It is more of, like, the root of things. Because it's, like, once you understand that taking on... What was the average balance? $5,000, I think, on a credit card. That's $108 a month that you're literally giving to the credit card companies and digging yourself deeper into a hole.
It's more than five, but yeah. I think that was the average when we looked at it. But I remember it was $108 is what you're paying in interest.
I think it's six or eight now. And I don't even think that would be the minimum payment on a credit card. So, like, that's one of the things... One of the things, like, what we say about when you're using credit cards for points, that's something that people don't know.
That if you actually, you know, spend $500 in gas, and then at the end of the month, you pay the $500 off, you don't have any problems with that. And you actually get free money for being a responsible... So, we've actually, like, inadvertently offered so much examples of improving your way of life and your financial literacy throughout the, like, 60-some episodes that we've given to you guys. Again, but the problem, the biggest problem, I think that people are going to encounter when even trying to implement, like, educational programs and stuff like that, is people think they're smarter or better informed than they are.
That is the big thing. It's the denial component or the ego component. Like, you got to get out of that.
Like, I still think I don't know everything. So, I keep reading, and I keep looking into stuff, and people come up with new concepts. And I'm like, well, that's really interesting.
Or I don't really know about tax planning. I don't know about, like, long-term planning. So, it's like I've been reading books on that.
So, not to stress it again, but, like, if you remember at the very beginning, people generally, on average, rated themselves 5.1 out of 7 on financial literacy. So, if you extrapolate it further, they would be in the very high level of financial literacy category. But they're not testing that way.
Most of them are falling into the low financial literacy. So, that, I don't know how to combat that, because that is a mentality thing. It's a mindset thing that, like, I guess you'd have to show people on an individual basis, okay, here's how much your budget was.
Here's how much you spent on this crap. Here's how much you spent on your credit card payments. This is how much the interest in the credit card was.
So, it would have to be, like, a... Like, basically, if your finances are not in an ideal situation that makes you feel comfortable, like, you're probably one of those, and you think you know about finance, you're probably one of the people that rates yourself high, but what's more... So, an example I came up with just, like, just shooting from the hip was, like, if you did a financial literacy course, the course would basically... One of the most important components would be you have to bring, like, bank statements and credit card statements and mortgage statements so you'd have all the information, because then it would be, like, every person would have different... Real-world data? ...data, but the data would be actually pertained to that person, so they'd be more interested in what... It'd be more relevant. It'd be more relevant to the individual. And that's exactly the point.
Like, people don't like theory as much as they like real-world examples so they can comprehend, like, what it translates to. And that really, I think, is beneficial. And the other thing I would say, because when we do create a course, like, I want to make it fun.
Like, finances does not have to be this boring, overwhelming, stress-inducing black hole. It really doesn't. It's not as complicated if you break it down to, like, specific principles and then you show the application of it.
And that's something, like, I definitely want to create. And then the other aspect, like, if you're going to do, like, courses, I think you would actually have to do, like, a precursor to the courses to find out what people are good at. So that you could, say, Person A is good at, like, debt.
They understand debt. So, like, to keep them engaged and motivated, you would actually say, well, you know a lot about debt. Good for you.
And then you could progress to something like interest, that they don't know as much about debt. But, like, just to, because I guess people need kudos to, like, actually want to learn. It's a personality quirk that I don't know about.
Well, that's one way. So if you had targeted courses towards people, but you actually made them bring in their real world data, and then you actually created a course that played to both their strengths and their weaknesses so that they didn't lose motivation, that would probably be a good way to do it. Maybe we should do that at some point.
Like, bring, like, pull up all my credit card statements and do it overall. I fully plan on doing something similar to that when we're on the road. I fully plan on actually having, like, a live stream things and the fireside chat things where we just have a group of people show up and we sit around either a campfire or even, like, a table at, I don't know, a Denny's or something like that.
We talk about finances and, like, I can, because I don't know everything, so I'm hoping to learn from the people, you people as well. But, like, I'd be able to actually show them, like, here's what debt is. Here's why it's crushing to your investing and your retirement.
And they actually, and that's something I didn't mention, but in the 2024, they actually, it was the first time they ever had five questions devoted to retirement. So if you are retired or about to retire, you might want to check out, like I said, Google this to look at what the questions, so you can find what the five questions were about retirement. One of them pertained to Medicare.
Another one was, like, the minimal withdrawals, whatever that's called, RMD or whatever it is. I don't know what the acronym is, but your mandatory withdrawal age is 70. So they actually had, like, retirement specific questions that I didn't think pertained to our situation or most of the listeners.
But if you are of retirement age or about to retire, totally Google it, check it out and look at the retirement questions to see if you need to improve your knowledge in an area that pertains to what you're about to go into or what you've just started doing. Yeah, because the reason that's super important for retirement people, because if you don't know about that 70 year old thing where you have to actually mandatory withdrawal, you're going to get penalized just as like you would if you'd be withdrawing early. They penalize you for not taking withdrawals.
And then if you don't have the tax planning thing in place, if you take out a lump sum that pushes you into a higher tax bracket, like you pay through the nose in taxes. And that happened with my mom when she cashed out $230,000 from her retirement to pay off the mortgage of the house that my parents are living in. Like that really, and then her social security was based on her income, which to me is gross negligence on the government's end.
Like those rules definitely need to be modified where that counts as income, but it's clearly not going to be consistent income. So then she actually got hit for what she was getting in social security on like... Because she had 200 and some thousand dollars of income so they take whatever they take. They took less, they gave her less because she was making more and like it really screwed up a whole bunch of stuff.
Yes, so that. But I can say that if you've listened to a lot of these podcasts or most of the podcasts, you are hands and feet above pretty much everyone else in America when it comes to financial literacy and knowledge and everything. So awesome, kudos.
I'd be interested to hear any questions or comments or even if you would like to know more about the survey or if you have specific topics that you need us to address that pertain to your weak spots in your financial literacy. So that I could actually create a podcast that would address your specific question. I think we're going to do taxes at some point because I've actually been reading books on taxes.
Because I want people to engage more. We get some engagement, but I'd like more engagement so that I could like... Because the podcast, I just kind of like wing it now because I don't really have a lot of people saying, hey, you should do a topic on closing the funds or you should do something on this or that. So I'm just like whatever I'm researching, I'm like, well, that sounds interesting.
True. They could say, hey, I don't know squat about taxes, do a tax podcast. And I'd be like, sure, we'll do that.
All right. So basically what Tim's saying is shoot us some comments. Ask us some questions.
Reach out. I want like wherever you're weak at, let me know so that I can create a podcast and emails and spreadsheets and all that fun shit for helping just you. Yeah, tailor it for sure.
Yeah. So that next week is going to be an awesome podcast. Basically, I came and I was at the grocery.
I was at Sheetz gas station and I was getting my num nums. The people in front of me were having a discussion about their finances and they said, we can't really afford this, but we worked hard this week, so we deserve it. So I was like, huh, that stuck with me.
And then I got a red flag. So I got home and I just kept bouncing around on my brain. So I got one.
So I played basketball, came back. So I have to look at this. So I looked into it and that I deserve it.
Mentality is a huge problem when it comes to personal finance. So the next week's episode is going to be just basically about the I deserve it mentality, what it is, why it happens, and how it is detrimental. It's going to be a banger.
So if you've ever said, hey, I worked 40 hours this week, so I deserve to go out to the bar on Friday night or whatever, if you ever used it, which we pretty much all have at some points, I deserve it. I've been on this diet for like a month. The dieting is the big one.
I deserve to actually have a cheat day. You don't give yourself rewards in the same thing you're trying to like pursue. That doesn't work.
But we've all said it. And so it stuck with me. And so next week's is about the I deserve it mentality.
It's going to be awesome. I hope to see you then. All right, guys.
See you next week. Shoot us questions. Questions.