Financial literacy isn’t a luxury—it’s an essential. It gives people the tools to make smart decisions, build independence, and move toward the goals that matter most to them. As the saying goes, without knowing, there can be no doing.
Yet, only about half of US adults are considered financially literate, and that number is even lower among younger generations—just 37% of Gen Z demonstrate basic financial literacy. The cost of this knowledge gap is real: in 2023 alone, financial illiteracy cost Americans an estimated $388 billion.
In employee-owned companies, financial literacy is even more powerful. Understanding how the business creates value—and how individual actions impact the bottom line—helps employee-owners make smarter decisions, strengthen their ownership mindset, and directly influence long-term success. Financially literate employee-owners are better equipped to engage with company performance, share in the rewards, and take real ownership of their futures.
Let’s break down the reasons why financial literacy is a must in today’s world.
From managing bills to avoiding debt traps, financial literacy helps people make smarter day-to-day choices. Knowing how credit works or how to budget effectively can prevent costly mistakes.
Planning for retirement, investing wisely, or saving for a big goal all require a strong financial foundation. Understanding risk and returns and setting realistic financial goals makes a huge difference over time.
With loans, credit cards, and mortgages so common, it’s easy to get overwhelmed. Financial literacy helps people borrow smart, manage payments, and reduce debt faster.
Good ideas require more than passion—they require sound financial planning. Entrepreneurs with financial know-how are better equipped to manage cash flow, seek funding, and sustain their businesses.
When people understand how to manage their money, the entire economy benefits. Informed individuals are more resilient during downturns and more likely to contribute to long-term growth.
Financial knowledge means freedom—freedom to negotiate a raise, plan for a major life event, or simply feel confident in managing your money without relying on others. Right now, just 52% of women in the US are financially literate compared to 62% of men—closing this gap is a key step toward equity and empowerment.
Access to financial education helps close wealth gaps and lift up underserved communities. It’s a powerful tool for social inclusion and long-term economic mobility.
At our April HR Peer Network meeting, employee-owned HR professionals shared great tips for making financial education more accessible and impactful in the workplace.
These peer insights are a powerful reminder that financial literacy is more than a state of understanding—it's a culture we build together, one conversation at a time. Financial literacy improves everyday life, mental health, and your chance at a secure retirement. Even the basics can make a big difference. It all starts with education.
If you are interested in this topic and others like it, join one of the NCEO’s Peer Networks today!