Ohioans Are Lagging Behind In Financial Literacy
Most Ohioians need more and better financial literacy education, two recent studies have found.
A 2018 WalletHub analysis of all 50 states and Washington D.C. ranked Ohio 16th in overall financial literacy knowledge.
Using income as an indicator of financial literacy rates, WalletHub’s study found members of households making less than $25,000 annually scored almost 21 points lower on a financial literacy assessment than members of households making $150,000 or more annually.
Complicating Ohio’s rank are two segments of the population which tend to polarize financial data in the state. According to a Talk Poverty report, Ohio is 26th in the country for income disparity, a ratio showing how evenly wealth is distributed among the richest and poorest households.
These findings contrast the results from a 2019 survey conducted by the Ohio Credit Union League which found about 76 percent of respondents said they were confident in their knowledge of personal finance. However, the League points out, the survey doesn’t represent the significant portion of Ohioans who struggle with financial literacy.
Though the income range among participants in the League’s study is unclear, 95 percent of respondents said they belong to an Ohio credit union, meaning they are considered banked.
“It gives them a financial literacy advantage over a large portion of Ohio’s population who do not keep money in a financial institution,” Mike Losneck, CEO of Eaton Family Credit Union, said.
Losneck believes the gap of financial literacy in Ohio’s population may be perpetuated by beliefs about how children should learn the subject.
Of the majority of participants in the Credit Union League’s survey, 66 percent believe parents are the best resource for teaching children financial literacy and only 14 percent believing schools are the better option for that training.
“Learning financial education at home might work for children whose parents are banked and comfortably managing their own personal finances,” Losneck said. “But for children living in Ohio’s large population of under-banked families, in lower-income households or where the adults aren’t successfully managing their finances, relying on parental advice for financial literacy training is likely not a good option.”
The Ohio Credit Union League offered these tips for improving your financial literacy:
Start simple. Go to a local credit union to open an account. Not only will it allow you to start saving money, as part of the account-opening process you’ll be able to learn more about your current financial situation and get some ideas on how to improve it.
Don’t be embarrassed or overwhelmed. It’s never too late, or early, to start learning about personal finance. Tackle one topic at a time based on what’s most pressing to you. For instance, if you’re struggling with credit card debt, consider education on credit cards and debt repayment first.
Use resources from the federal government. The Financial Literacy and Education Commission website contains a myriad of resources for all sorts of financial education, from youth savings programs to financial literacy and education programs.
Search the internet. If you’re in doubt about a certain financial topic, don’t be afraid to ask Google or another search engine you prefer. There are plenty of forums and articles available online to point you in the right direction. Just make sure you verify the resources offering advice and seek opinions from multiple platforms before making any important decisions.
Take a financial literacy class. There are plenty of financial literacy classes available through local credit unions, adult education centers and higher education institutions. If you would rather learn at your own pace, consider picking up a financial literacy self-help book or taking an online course.
Seek help. Sometimes, one-on-one help can be the most effective way to enhance financial literacy. Consider seeking a mentor or a certified financial planner. Most credit unions employ certified financial planners who are happy to help you tackle all sorts of personal finance questions.
Dave Godek, MBA
Business Development Manager
Eaton Family Credit Union