Guest writer: Financial literacy is more important now than ever

In a world increasingly shaped by individual financial responsibility and complex financial products, the ability to understand and manage one’s finances is no longer a luxury — it is a necessity. Financial literacy, once viewed as a nice-to-have skill, is now a cornerstone of personal stability and national economic health. This comes at a time when state bills to make financial education a high school graduation requirement have stalled in Washington. 

As reliance on traditional pensions decreases, individuals must navigate retirement planning largely on their own, often through 401(k)s or IRAs. This shift places a significant burden on people to understand investment vehicles, risk tolerance, compound interest, and long-term financial planning — topics that are not always taught in school. A lack of preparation can lead to serious consequences. Some 68% of working Americans say the average worker cannot save enough on their own for a secure retirement, according to a 2021 report by the National Institute on Retirement Security (NIRS, 2021).

Meanwhile, many Americans are facing mounting debt. Rising costs for essentials like housing, health care and education — paired with wages that have not kept pace — have driven people to rely increasingly on credit. In the first quarter of 2025, total U.S. household debt hit a record $18.2 trillion, with credit card balances alone exceeding $1.1 trillion, according to the Federal Reserve Bank of New York (New York Fed, 2025).

Financial literacy cannot eliminate these pressures, but it can help individuals make better choices within their constraints. Understanding budgeting, credit and interest rates empowers people to manage debt more effectively and avoid costly pitfalls.

At the same time, the financial system itself has grown more complicated. From mobile banking apps and cryptocurrency to buy-now-pay-later services and robo-advisors, today’s consumers face hard-to-navigate options. While these innovations offer flexibility and access, they also require users to understand nuanced financial principles — and to be able to identify scams and high-risk products.

According to a 2022 study by FINRA’s Investor Education Foundation, people with low financial literacy were significantly more likely to engage in expensive credit behaviors and fall victim to financial fraud (FINRA, 2022). In a rapidly evolving landscape, a lack of financial knowledge comes at increasing costs.

So, what can be done? The good news is that financial literacy is a skill that can be taught and learned. And the evidence increasingly suggests that financial education does not just improve test scores, it improves financial behavior.

Students exposed to financial education are more likely to apply for and use federal aid, are less likely to carry credit card balances and have about $1,500 less in private loan balances (Stoddard & Urban, 2020). Requiring financial education in high school increases credit scores and decreases severe delinquencies for those aged 18–22 (Urban et al, 2020), and also reduces non-student debt and improves repayment for those under 30 (Brown et al, 2016).

If you want to learn more or get involved, I would highly recommend attending the Washington Economics Symposium (July 29 at the University of Washington). This symposium brings together educators, industry leaders and policymakers to tackle pressing economic issues and attend workshops with hands-on instructional resources to advance economic and financial literacy in Washington.

If we want a society where people are empowered rather than overwhelmed by financial decisions, where the economy is driven by informed participation, then we must invest in economic and financial literacy — now more than ever.

Adam Wright is an associate professor of economics and director of the Center for Economic and Financial Education at Western Washington University. He holds a Ph.D. in Economics from the University of California, Santa Barbara, and an MEd in Secondary Education from Arizona State University.