COLUMBUS, Ohio — Between inflation and employment changes, personal finances are a major pressure point for Americans right now. A lack of financial knowledge only adds to that stress.
A George Washington University study found only 16% of Americans ages 22 to 41 qualified as financially literate. The same study also found only 19% of millennials see themselves as having high knowledge about personal finance and fundamental financial concepts.
Jacob Channel is a senior economic analyst with Lending Tree. He said there is no shame in asking questions.
“Especially when it comes to financial literacy, especially when it comes to complicated things like 'How do you buy a house?' What does a lender do? Specifically? What is a 401k?' Nobody's going to laugh at you. And nobody's going to think less of you because you don't know the answers to these questions,” said Channel. “Just ask, worst-case scenario, they'll say, ‘I don't know.’ But somebody somewhere will, and somebody somewhere will be able to help you.”
Channel recommends contacting your company's human resources department because they understand things like your employee benefits.
According to Lending Tree, budgeting and learning the basics of your finances can really help set you up for success.
“One of the easiest things you can do if you're trying to be more financially literate is to just create a budget. Sit down, make sure that you truly understand how much money you're bringing in each month, and also how much money you're spending,” said Channel. “It can be really easy to lose track of how much money you're spending, especially if you do something that seems really small and innocuous every day, you might not realize how much it adds up.”
People who are financially stable start looking at bigger investments like buying a home. However, no matter how fiscally fit you are, there are still some things to keep in mind if you are buying in the pandemic.
“If you're getting a mortgage now, then you're going to probably not pay a higher interest rate than you would have had you gotten one, six months or a year ago,” said Channel.
Channel said it is still a low rate from a historical perspective. Rates back in the 80s were in the double digits. if you already have a mortgage, you can expect your rates to stay the same.